Two Dallas Private Equity Firms Enter Purchase and Build Agreements in Healthcare Specialties

Two Dallas-based private equity firms are making new strides in healthcare with buy and build deals.

Riata Capital Group has entered into a secondary transaction led by a general partner for its holding company AEG Vision, a purchasing and construction optometry platform. The company said the deal provides AEG with “substantial capital” for continued growth, while returning money to early investors.

Riata founded AEG in 2017 after acquiring three regional eye care groups. It helped AEG grow from 65 firms to over 235 and expanded its coverage from five states to 12.

Investment funds managed by Morgan Stanley’s secondary group led the transaction.

The announcement comes shortly after Riata sold its WSS holding company to Foot Locker for $ 750 million after doubling the company’s revenue since 2016.

Riata, which focuses on consumer, business and healthcare service companies, has invested more than $ 470 million in equity since late 2016, including $ 270 million last year. It targets $ 25 million to $ 150 million equity investments in companies with pre-tax earnings of $ 5 million to $ 30 million.

Evercore has been the main financial advisor to Riata and AEG. Kirkland and Ellis, Ropes and Gray, and Vinson and Elkins served as legal advisers.

Another private equity firm focusing on the buy and build strategy is Pharos Capital, a mid-sized company with offices in Dallas and Nashville. It acquired THEMA Health Services, a provider of palliative care, skilled home care and palliative care services in Arizona.

Founder Theresa Lungwitz will retain a minority stake in THEMA and will be its executive chairman. Additional terms were not disclosed.

THEMA, founded in 1996, provides services in the home of patients, as well as in nursing homes, qualified nursing homes and assisted living facilities. It serves more than 2,000 patients per year, including a number from underserved rural Arizona markets.

Pharos, founded by doctors in 1998, has invested in 55 companies and manages $ 1.3 billion in private equity assets. Over the past year, Pharos, which aims to help underserved markets, has aggressively entered the palliative home care market.

This is the second investment from Pharos’ latest flagship fund, Pharos Capital Partners IV, LP, which is investing alongside its shadow fund, Pharos Capital Partners IV-A, LP, a licensed rural business investment firm.

Its first fund investment, announced on September 22, was a cataract outsourcing services company, Vantage Outsourcing, based in Effingham, Illinois.

In August, she announced that her holding company, Charter Health Care Group, was acquiring San Antonio-based Generations Hospice Care Inc.

Pharos looks for companies with at least $ 10 million in revenue and a growth rate of 20% or more and typically invests between $ 25 million and $ 50 million.