Alison Hughes and Alex Abrahams of Pacific Smiles
It was smiles all round at Pacific Smiles today after the dental company’s debut on the Australian Securities Exchange on Friday.
The initial public offering delivered a paper profit of $98.8 million to Alex Abrahams and Alison Hughes, the two dentists who founded Pacific Smiles.
The offer was priced at $1.30 per share and reached $1.78 a share by close of trading on Friday, a 35% premium which gave Pacific Smiles a market capitalisation of almost $270 million. A total of 152 million shares were issued in the float which raised $45 million.
The first day trading price values the roughly 26% of the company controlled by Abrahams and his family, and the roughly 10 % owned by Hughes and her spouse, at around $98.8 million combined.
Despite the huge payday Abrahams plans to continue working as a dentist three days a week while Hughes will continue in her executive role at the business.
Pacific Smiles managing director John Gibbs told SmartCompany in terms of operations there is really no change.
“We see the IPO as being a step in the journey and not the end of the journey,” he says.
“There was some selling down but not a great deal of selling down. The founders and management and board all maintained their stakes, it wasn’t an exit for any of them.”
Gibbs says right from when Pacific Smiles started in 2003 there was an intention to reach the point where the company was large enough to undertake an IPO.
“That was an undertaking we made to shareholders who joined us along the way, many of whom were involved in the business,” he says.
Pacific Smiles currently operates 42 centres and Gibbs says the growth plan for the business is to roll out more centres at a rate of six to ten per year.
“Acquisition of individual practices is not our model – we are roll out, not roll up – but having said that, strategic acquisitions that make sense are considered,” he says.
Gibbs puts the success of the IPO down to the attractiveness of the health sector and the “strong fundamentals” of Pacific Smiles.
The business turned over $96 million last year with a profit of $15.1 million.
“In dental there is only one other listed entity [1300Smiles] so there was interest in a second entity in this field,” he says.
“We have always kept patient care as being the absolute focus of the business. That’s been our philosophy from the start and we think that has really driven our results.”
The IPO comes as the dental industry continues to see significant growth with an increasing focus on dentistry from a cosmetic and healthcare point of view.
Australia’s ageing population is also driving the dental boom with people’s teeth deteriorating as they get older.