Skip to main content

A prominent network of dental clinics and a pet store chain are aiming to go public in the coming weeks as Canada’s market for initial public offerings expands into bricks-and-mortar health care and consumer products.

Dentalcorp Holdings Ltd., Canada’s largest national chain of dental practices with about 7,000 employees and more than 400 locations across the country, is planning a $700-million IPO of subordinate voting shares on the Toronto Stock Exchange, according to preliminary documents filed for the offering last week.

Meanwhile, Pet Valu Canada, which owns more than 600 stores across the country, is also planning to go public and raise around $300-million, according to two sources familiar with the plans. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the deal.

Both companies are backed by private-equity firms. Dentalcorp’s largest shareholders include the American-French private-equity firm L Catterton, as well as Toronto-based Imperial Capital and pension fund OPTrust. The company aims to price its IPO between $16 and $19 a share and its major backers have agreed to purchase up to $250-million worth of shares at the IPO price.

Two of Dentalcorp’s top shareholders will retain significant control over the operations of the company even after the IPO, with L Catterton and chief executive officer Graham Rosenberg controlling roughly 70 per cent of voting rights once the company is listed.

Dentalcorp was founded in 2011 but steadily grew over the past decade, sometimes acquiring up to 60 dental practices in the course of a year. Doing so involved taking on huge amounts of debt – the company indicates it intends to use most of the IPO proceeds to pay down its debt that has grown to $1.7-billion as of March 31.

Dentalcorp’s revenue fell 13 per cent in 2020 to $666-million because most clinics within its network were forced to close last spring. The company is currently not profitable, charting a net loss of $157-million in 2020 and a net loss of $64-million the year prior.

Pet Valu Canada is owned by Atlanta-based Roark Capital Group, which has investments in almost 100 retail businesses across North America. Last November, Pet Valu Inc., an American counterpart, shut down all 358 of its stores, citing the impact of the pandemic on its sales.

Pet ownership in Canada has increased sharply since the start of the pandemic, according to a report from market research company Narrative Research. Eighteen per cent of current pet owners in Canada have obtained a pet since the start of the pandemic.

But while the pandemic trend of pet adoptions is likely to contribute to the industry’s growth, the industry has been slow to adopt e-commerce. There is growth potential in online sales, however.

“In Canada, e-commerce for pet food is under 6 per cent of total volumes,” said George Minakakis, a retail consultant. Mr. Minakakis suggested Pet Valu may be looking to invest more in e-commerce.

In January, San Diego-based Petco Health and Wellness Co. Inc. raised US$864-million in an IPO on the Nasdaq. After an initial pop after the offering, its shares have fallen while the broader market has gained.

Pet Valu Canada did not return a request for comment.

Canada’s IPO market had a successful 2020 owing to a slew of tech companies such as Nuvei Corp. and Dye & Durham Ltd. going public, but suffered a slight slowdown in the early months of 2021. Sources told The Globe last week the market is set to roar back, with at least 15 issuers, spanning a wide spectrum of industries, planning to go public over the next few months on the TSX.

With a report from Susan Krashinsky Robertson in Toronto