CREATE returns to family-run business after buying out Livingbridge

CREATE Fertility today announced that it has bought out its minority private equity investor Livingbridge and plans to pursue its ambitious European growth strategy as a family-run business.

Financial details of the transaction have not been disclosed but other shareholders, including majority shareholder and founder Professor Geeta Nargund, will receive expanded holdings in the company.

Managing director and CEO Praful Nargund told HM the move underpinned the company’s commitment to expanding its less drug intensive approach to IVF globally.

‘Our ambition has always been to shift the paradigm of IVF to become more natural, safe and affordable and that was why we decided to take investment on in the first place – because we thought the sector was going in the wrong direction and putting profits over people. We wanted to show that you could actually do the right thing and be successful at the same time and this is just the next phase of us achieving our mission, which is to transform the sector globally,’ he said.

CREATE has been a pioneer of ‘natural’ and ‘mild’ IVF techniques, which use fewer or no drugs in a bid to increase safety and reduce side effects. Established in 2008 with a single site, it has expanded rapidly since bringing Livingbridge on board as minority investor in 2013. In the last six years, revenue has jumped from £4m to £21m and at the end of 2017, it launched its low-cost clinic abc IVF, which has just opened its second UK site. More recently, the company expanded into Europe with the acquisition of Copenhagen-based Vitanova Fertility Clinic, which attracts patients from across the continent.

Despite Livingbridge’s backing, Nargund said that much of the company’s growth to date had been achieved organically through free cash flow. Looking ahead, he said CREATE would use Vitanova as a platform for expansion in Europe while continuing to rollout the abc brand in the UK.

‘We are taking a long-term view on the sector. IVF is an area of medicine which is still relatively young. Clearly, we have expanded with natural and mild IVF and we have done a lot of innovation around affordability, but we want to continue to disrupt this sector and fundamentally a science which is at the forefront of medicine needs long-term commitment. My family can give that long-term commitment and prioritise different elements of our strategy accordingly so that we can continue to transform the sector,’ he said.

Nargund told HM that, longer term, CREATE could seek outside investment to pursue specific objectives and that it could even look to the public markets.

‘CREATE is a company that likes to disrupt and show people that their expectations can be exceeded. If the public markets can be a direction that will help us achieve our mission to make IVF more natural safe and affordable, then it’s something we’re certainly going to be looking at in future,’ he said.

Recent research by international law firm McDermott Will & Emery suggests there are early signs of a race towards consolidation in the fragmented global fertility market. This year alone has seen Silverfleet Capital buy UK group CARE Fertility from Bowmark Capital and Swedish investment firm Impilo acquire a majority stake in UK-based The Fertility Partnership.

However, it concluded that regulatory and governance challenges, along with the need to identify suitable targets and develop robust exit strategies, could drive investors to alternative structures such as debt instruments, while Sovereign Wealth Fund and private family offices could also seek to increase their exposure.

‘Will we take investment on in the future? Of course,’ said Nargund. ‘But for an aim and not for the purposes of just trying to maximise the return and that is what I think healthcare has to be about. In independent healthcare especially, we are nothing unless we’re trying to improve health outcomes and affordability and if you do those two things correctly you drive value for your company for your patients and for your staff. That’s a fundamental pillar of our ethos, our basic charter of the company, and so this step we believe will ensure that continues.’