One month after making a substantial on-market purchase of shares, accomplished business leader Bruce Dixon has been appointed to the board of Apiam Animal Health (ASX: AHX), an appointment that may draw the attention of both institutional investors and private equity players alike. 

Dixon brings over 30 years of leadership experience, most notably as a former Non-Executive Director of Greencross, one of Australia’s largest veterinary operators, which was acquired for $675 million in 2018 by TPG. 

TPG then sold down its stake in 2022 at a valuation of $3.5 billion. 

Apiam, while not boasting as large a scale of vet clinics as Greencross, is still a noteworthy player in the space with over 80 clinics across Australia that employ more than 350 veterinarians.

Dixon’s non-executive appointment follows his purchase of a 13.4% stake in Apiam through an investor syndicate, which stirred market activity given the leadership roles he held at Healthscope and Spotless – both companies that he led to takeovers at substantial premiums. 

His most recent venture, prior to taking a substantial position in Apiam, is consolidating a portfolio of pubs and hospitality venues under Australian Venue Co, where having partnered with KKR since 2017, he remained a Board member and shareholder until it was recently sold to PAG Asia Capital.

Greencross and Apiam: Strategic Synergies

Dixon’s directorial role at Greencross gives him first-hand experience in navigating the highly competitive veterinary sector, particularly with regard to consolidation, economies of scale, and high-margin service offerings. 

Both Greencross and Apiam share striking similarities in their business models, each operating in the veterinary care and pet services sectors. While Greencross expanded rapidly into pet retail through its Pet Barn and City Farmers outlets, Apiam has remained a pure play vet business making over 30 clinic acquisitions in recent years.

Greencross Vets is widely recognised by pet owners throughout metropolitan cities, whereas Apiam commenced its animal health journey in regional towns, primarily servicing livestock animals. As Australia’s population has expanded and Apiam’s network of vet clinics grew, they have not only increased their presence in regional cities but built new clinics in emerging suburbs on the fringes of major cities, quickly establishing a large and loyal customer base of pet owners. Apiam has previously reported that over 85% of their clinic locations generate greater than 50% of their revenue from pets.

Particularly popular amongst pet owners is Apiam’s all-inclusive Best Mates membership program which saw a 32% annual increase in FY24 to 11,300 members.

A Calculated Investment Move

The Dixon-led syndicate’s decision to acquire a substantial stake in Apiam comes at a time when the veterinary services sector is experiencing heightened interest from investors with a surge in pet ownership in recent years. 

The pandemic spurred this rise in pet ownership, a trend that continues to fuel demand for veterinary services, contributing largely to $204.8 million in revenue for FY24 for Apiam, a 6.2% annual increase, and $7.2 million underlying net profit – 12.3% increase. 

The strategic fit between Dixon’s investment in Macedon Lodge, a premier thoroughbred training facility, and Apiam’s veterinary services for the racing and breeding industries further cements the alignment of interests with the thoroughbred industry being one of Apiam’s key customer segments. 

Apiam Chairman, Professor Andrew Vizard, welcomed Dixon, commenting, “Bruce has an accomplished record overseeing profitable growth in many companies and will be a valuable addition to our Board of Directors. We look forward to working with him.”

Dixon’s experience in consolidating businesses, particularly in the veterinary and healthcare sectors, positions Apiam for continued success in a growing industry that shows no signs of slowing down where a second growth wave is expected as COVID-19 pets enter middle and old age over the coming decade. With Dixon’s guidance, Apiam could potentially follow in the footsteps of Greencross, capitalising on the ongoing demand for veterinary services where Australia’s high population of both companion and livestock animals have made the market highly attractive to private equity investors.