Katie brings tremendous executive and international leadership experience to the Board. She joins Yves de Balmann, Tony Bowe, John Francis, Andrew Hauptman and Andrew Dunn as advisors to the Firm.

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ABOUT MS. TAYLOR

Kathleen (Katie) Taylor is Chair of the Board of RBC. She has served on the RBC board since 2001, where she has chaired the Human Resources and Corporate Governance Committees, and served on the Audit and Risk Committees. She is also Chair of the Board of the Hospital for Sick Children Foundation and a member of the Board of Trustees for the Hospital for Sick Children. Ms. Taylor is a director of the Canada Pension Plan Investment Board, where she serves on the Audit and Human Resources Committees, and a director of the Adecco Group, where she serves on the Audit Committee.

Ms. Taylor is the former President and Chief Executive Officer of Four Seasons Hotels and Resorts where she held a number of senior leadership roles during her 24-year career with the company. Prior to becoming CEO in 2010, she served as President and Chief Operating Officer and President, Worldwide Business Operations. She was instrumental in establishing the firm’s global portfolio of luxury properties and ensuring the brand’s international success.

Ms. Taylor received a Master of Business Administration degree from Schulich School of Business, a law degree from Osgoode Hall Law School and a Bachelor of Arts (Honours) from the University of Toronto. She has received an honorary Doctor of Laws from York University, an honorary Doctor of Humane Letters from Mount Saint Vincent University, the Schulich School of Business Award for Outstanding Executive Leadership and the inaugural Medal for Career Achievement from the Hennick Centre for Business and Law.

Ms. Taylor is Chair of the Principal’s International Advisory Board of McGill University, a member of the Dean’s Advisory Council of the Schulich School of Business of York University, and a member of the C.D. Howe Institute’s National Council.

Imagine studying at a university located on a lush Caribbean island. You attend classes and mingle with the other students on a campus nestled in a sun-drenched peninsula overlooking an expanse of brilliant blue sea.

That pretty much describes St. George’s University (SGU), a private Grenada-based post-secondary institution that trains doctors to work in healthcare systems around the world.

Founded in 1976 and led by chancellor Dr. Charles Modica, the school is international in scope, drawing students and faculty from 140 countries, and operating a clinical training program that is affiliated with more than 70 hospitals and clinical centres.

A couple of weeks ago, SGU was the focus of a major control-stake transaction involving an investor group led by Canadian private equity firm Altas Partners and a fund advised by Baring Private Equity Asia. Completed in partnership with Modica and SGU’s management team, the transaction has been estimated at US$750 million.

SGU is the second deal done by Altas since its launch in 2012 by former Onex Corp Managing Director Andrew Sheiner. It marks an important step for a firm that has sought to blaze a new path in PE dealmaking.

Altas was conceived by Sheiner to invest selectively—writing equity cheques of between $100 million and $500 million in one or two opportunities a year—and hold assets long enough to produce maximum value. Its horizons go well beyond those of most buyout firms, which typically sell companies within three to five years. Altas aims to invest more flexibly, whatever the amount of time, whatever the circumstances, to achieve higher multiples on its invested capital.

How does this investment thesis apply to the idyllically located SGU? I addressed this question to Sheiner and Partner Scott Werry, who was Altas’ point man on the deal.

“In general, we want to invest in businesses that are hard to replicate and possess a clear natural advantage,” said Sheiner. “They should be high quality, market-leading companies that 10 years from now will be just as important, just as relevant and as highly profitable.”

“That’s a really high bar,” Sheiner observed, but it is one he said he believes has been met by SGU. “What Charles and his team have built at St. George’s over nearly four decades is very hard to replicate,” he said. “There is no risk of obsolescence.”

Werry, who joined Altas from Providence Equity Partners in 2013, agreed.

“As a premiere international medical school, St. George’s is a really good fit for us,” he said.

Werry noted that SGU has since inception been responsible for “superior student outcomes,” turning out more than 14,000 graduates who have practiced as physicians, scientists and healthcare professionals in more than 50 countries. That record has translated into solid and sustainable financial performance: “St. George’s has a compelling free cash flow profile,” he said.

The school’s future prospects may be even better. One of its specialities is training primary care providers, an occupation that is in high demand—last year, the World Health Organization reported the global shortage of primary care and other skilled healthcare professionals currently stands at 7.2 million. That number is expected to reach 12.9 million by 2035.

Primary care shortages are a particular concern in the U.S. healthcare delivery system, which is where most SGU-educated doctors eventually practice. SGU reported in June that during the past three years it has placed more physicians into first-year U.S. residency positions than any other medical school.

SGU also found a fit with Altas and its consortium. Introduced in February 2013, Werry said Modica was searching for a partner for “the next chapter of the family-owned business.”

“St. George’s required a stable capital base that would give it continuing opportunities to improve the school and undertake global expansion,” he said. It needed a value-adding partner—one that could help increase resources for academic development, course offerings and student services, and build additional networks and strategic relationships.

Sheiner said alignment was found because instead of looking for a “quick exit,” Altas was prepared to be “a long-term steward of the business.” It also offered SGU strong operational capabilities and “a responsible capital structure, with a more conservative use of leverage.”

“Inappropriate capital structures are the existential risk of private equity,” he said.

Baring also brought value to the table. A pan-Asia private equity firm with headquarters in Hong Kong, Baring specializes in making investments in the for-profit education sector. Its portfolio includes a variety of K-12, post-secondary and educational content companies.

Altas led a group of several institutional investors in the SGU transaction. Among them was OPSEU Pension Trust (OPTrust), manager of the $16 billion retirement plan of Ontario’s public employees.

Sandra Bosela, co-head of OPTrust Private Markets Group (PMG) and responsible for its global PE activity, told peHUB Canada that merit was seen in the investment because of SGU’s “strong reputation and global strategic partnerships” and its “crucial role in responding to emerging healthcare trends.”

SGU is OPTrust PMG’s 12th direct deal in the last two years, and the second of three expected to close this summer. In July, it joined with Imperial Capital Group in making a $121 million investment in Dental Corp, a group of Canadian dental care clinics.

Bosela said OPTrust PMG has “a flexible capital approach that can support a range of market strategies, structures and horizons.” Its role in the SGU transaction reflects “an opportunity that calls for greater flexibility and a longer horizon in order to provide capital stability and support for growth.”

“Strong global partnerships are an essential pillar of our private equity strategy,” she said. “We aim to work shoulder-to-shoulder with experienced, like-minded investment partners. Alignment of interests is key to all of our deals, but it is especially important when we are taking a longer-term approach.”

OPTrust is part of growing community of institutional investors that are looking to source more PE deals directly but that lack the scale of a mega-sized pension fund organization to achieve this objective on their own.

It was these potential partners that Sheiner had in mind when he founded Altas. Since then, strategic collaborations have been forged with a core group of institutional investors, including pension funds, insurance companies and family offices.

Sheiner said he believes Altas’ partners have signed on because they are “keenly interested in a unique investment model consisting of deeper relationships, truer alignment and real engagement.” Giving it continuous access to a large pool of co-investment dollars, they have allowed Altas “to deploy a lot of capital in a short time to some very attractive and bespoke opportunities.”

Altas’ debut transaction was last October’s buy of NSC Minerals, a Saskatoon-based provider of salt for highway de-icing, industrial and agricultural applications. NSC was acquired from U.S. private equity firm Wynnchurch Capital, which bought it in 2011 from Canada’s TriWest Capital Partners.

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KIRK FALCONER, PE HUB

After 17 years at Onex Corp. – where he was a managing director who oversaw some key investing platforms – Andrew Sheiner hung out a shingle in 2012 to create Altas Partners. Since then, he has assembled a team that includes former colleagues as well as industry experts from firms such as KKR & Co. and Providence Equity Partners. Together they are searching for large deals, hoping to write equity cheques of between $100-million and $500-million a transaction.

To differentiate themselves in the intensely competitive private equity market, the team at Altas is keen on investing in assets that can be held for longer than usual. Private equity firms typically sell their investments after four to five years, but Mr. Sheiner is looking for opportunities that can deliver bigger profits if they are owned for longer than that.

Not only does that mindset help Altas line up co-investors such as pension funds, who often look for long-term opportunities, but Mr. Sheiner said it helps the firm avoid some of the traditional drawbacks.

Because the private equity industry has matured over the past two decades and now has roughly 400 North American firms with more than $500-million in capital each, the majority of deals today stem from one private equity investor flipping an asset to another. “Sometimes that’s done for the right reason,” Mr. Sheiner said. “Other times, it’s done simply for structural considerations.”
Such sales come with transaction costs, and they are also subject to taxes, which can strip out value. More than that, investors can suffer when a private equity fund they have money in sells an asset to a second fund they have also invested in, because the embedded expenses and taxes create costs along the way. “It’s not uncommon for large investors to find themselves on both sides of the transaction,” Mr. Sheiner said.

To date, Altas has struck two deals. Its first, in late 2013, was the acquisition of Saskatoon-based NSC Minerals, which provides salt for road de-icing and agricultural applications in Western Canada and the northwest U.S.
The second, which closed this week, involves Altas teaming up with a fund advised by Baring Private Equity Asia to acquire an equity investment in St. George’s University. The school, based in Grenada, offers medical degrees, and its graduates often become medical residents in the United States. Financial terms were not disclosed, but a source familiar with the transaction said the deal valued St. George’s at $750-million (U.S.).

To help shoulder the burden, Altas teamed up with OPSEU Pension Trust (OPTrust), the pension plan for Ontario public sector employees, to share its portion of the transaction. Such partnerships come naturally to the firm because of its team members’ long-standing relationships. The deal is OPTrust’s 12th direct private investment in the past two years.

In an ideal world, Altas would like to acquire one to two large businesses a year, Mr. Sheiner said, but acknowledged that it is a tough landscape to navigate because it is a “crowded market.” And given the recent trend of disruption, where long-standing business models are suddenly shaken to the core by technological innovation, the team is taking their time to find investments whose business models aren’t susceptible to such immediate change.

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AUGUST 8, 2014 — TIM KILADZE, THE GLOBE AND MAIL

ST. GEORGE UNIVERSITY RECEIVES EQUITY INVESTMENT FROM ALTAS PARTNERS AND BARING PRIVATE EQUITY ASIA

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Investment Will Support Continued Expansion and Enhanced Services for Students

St. George’s University today announced that it has received a substantial equity investment from a group led by Canadian investor Altas Partners and a fund advised by Baring Private Equity Asia. The Altas-led investment group and the fund advised by Baring Private Equity Asia are investing in partnership with St. George’s current management team, led by Chancellor Charles R. Modica, who co-founded the University in 1976. Dr. Modica will remain in his leadership position, and he and the other current owners of the University will collectively remain the largest shareholder. Financial terms of the transaction were not disclosed.

Founded as an independent School of Medicine in 1976, St. George’s is a leading center of international education, dedicated to developing outstanding physicians and improving health standards throughout the world. Its professors, students, and graduates are from 140 countries, and the School of Medicine’s clinical training program has affiliations with more than 70 teaching hospitals and clinical centers, principally located in the United States and United Kingdom. The University has more than 14,000 graduates, including physicians who have practiced medicine in all 50 US states, Canada, as well as 50 other countries. Most St. George’s-trained doctors are involved in primary care, a significantly underserved area of healthcare, particularly in the US. Today, more than 6,000 students are enrolled and studying in 52 academic degree programs, including Doctor of Veterinary Medicine as well as standalone and dual-degree graduate programs that include MBA and MPH.

“At SGU, we strive to improve the lives of those we serve: our students and the local communities where they train and practice,” said Dr. Modica. “Our job is to be an important contributor to healthcare delivery systems around the world. We are thrilled to partner with Altas and Baring Asia who share our goals and passion for educating students and who have stellar track records working with businesses to grow over the long term. With this investment, SGU enters a new chapter of its development with a focus on expanding student resources, supporting our research and undergraduate programs, adding international capabilities, and enhancing our relationships with hospital and university partners.”

Andrew J. Sheiner, Founder and Managing Partner of Altas, stated, “Under Charles Modica’s leadership, SGU has built an important academic institution that helps meet the urgent need for talented and well-trained primary care physicians in the US and abroad. In line with our investment philosophy, we bring a long-term outlook to supporting SGU and look forward to partnering with Charles and the team to add lasting value to the University in the years to come.”

Added Jean Eric Salata, Chief Executive and Founding Partner of Baring Private Equity Asia, “We appreciate SGU’s deep engagement with Grenada and the other communities it serves, and are dedicated to continuing that commitment going forward. As an international investment advisor, we are excited at the prospect of expanding SGU’s capabilities. Given the more than one million medical school applicants across Asia every year, we look forward to leveraging our education sector capabilities throughout the Asia region to build upon the leadership position SGU has established over many years.”

“Altas’ and Baring Asia’s investment in St. George’s University is a powerful vote of confidence in our country and our longstanding partnership with this school,” added Grenada’s Prime Minister, Dr. The Right Honorable Keith C. Mitchell. “For over 38 years, the Grenadian community has embraced St. George’s University and its students, and in turn, SGU has been a vital contributor to the island, adding significantly to the local economy and providing employment and education opportunities to our citizens. Since 2005, SGU has granted more than $90 million in scholarships to Caribbean students, many of them Grenadian. We are grateful that St. George’s world-class education is available to our citizens, and look forward to expanding our partnership as SGU grows. We are proud that St. George’s University calls Grenada its home.”

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ABOUT ST. GEORGE’S UNIVERSITY

Founded as an independent School of Medicine in 1976, St. George’s University has evolved into a leading center of international education, drawing students and faculty from 140 countries to the island of Grenada, in the West Indies. Students attending St. George’s enjoy the benefits of a thriving multicultural environment on the True Blue campus, offering all the amenities and technologically-advanced facilities of a world-class institution.

The University’s more than 14,000 graduates include physicians, veterinarians, scientists, and public health and business professionals across the world. The University offers medical and veterinary degrees in the schools of Medicine and Veterinary Medicine, respectively, and independent and dual graduate degrees in the sciences, public health, and business. Undergraduate degree programs are also available through St. George’s School of Arts and Sciences. The University’s programs are accredited and approved by many governing authorities and repeatedly recognized as the best in the region. St. George’s is affiliated with educational institutions worldwide, including the United States, the United Kingdom, Canada, Australia and Ireland. For more information, please visit www.sgu.edu.

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ABOUT ALTAS PARTNERS

Altas Partners is an investment firm with a long-term orientation focused on acquiring significant interests in high-quality, market-leading businesses in partnership with outstanding management teams. Key elements of our approach include prudent capital structures, active ownership through strategic and operational support and an emphasis on sustainable value creation. We strive to deliver outstanding investment returns for our investing partners, which include pension funds, insurance companies and large family offices. Altas was founded as a collaborative partnership and is led by seasoned private equity professionals and experienced operating executives. For more information, please visit www.altas.com.

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ABOUT BARING PRIVATE EQUITY ASIA

Baring Private Equity Asia is one of the largest and most established independent private equity advisory firms in Asia and advises funds with total committed capital of over US$5 billion. The firm runs a pan-Asian investment program, specializing in mid-cap buyouts and providing growth capital to companies for expansion or acquisitions. An active education advisor, Baring Private Equity Asia advises funds that maintain a global portfolio of assets including K-12, post-secondary and educational content businesses. The firm has been advising funds in Asia since its formation in 1997 and has approximately 100 employees located across seven offices in Hong Kong, Shanghai, Beijing, Mumbai, Singapore, Jakarta and Tokyo. For more information, please visit www.bpeasia.com.

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Media Contacts:

Margaret A. Lambert, MA
Director of University Communications and Publications
mlambert@sgu.edu
631-665-8500, ext. 91-212

Andrew Cole/Lesley Bogdanow/Alexandra LaManna
Sard Verbinnen & Co
212-687-8080

Richard Barton
Newgate Communications
Richard.barton@newgate.asia
+852-9301-2056

Altas welcomes Anthony Bowe as the newest member of its Advisory Board. Tony retired at the end of 2013 as Co-Head of Credit Suisse’s Private Fund Group, having been with PFG, and its predecessor at Donaldson, Lufkin & Jenrette, since 1998. Tony joins Yves de Balmann, John Francis, Andrew Hauptman and Andrew Dunn as advisors to the Firm.

Altas, together with its partners and senior management, has acquired NSC Minerals. Founded in 1988 and based in Saskatchewan, Canada, NSC Minerals is the leading provider of salt for road safety, industrial and agricultural applications, serving customers including municipal, provincial and state governments in Western Canada and the North Central United States. For more information on NSC please visit www.nscminerals.com.

St. George’s University in Grenada has landed a $750 million investment from a group led by Canadian private-equity firm Altas Partners LP and a fund advised by Baring Private Equity Asia, according to a person familiar with the deal.

The new investors will hold a majority stake in the for-profit college, though the original owners will collectively remain the largest single shareholder. The companies declined to share details of the new ownership structure.

The investment underscores the market opportunity for high-quality medical education overseas, as the number of open slots at U.S. schools is dwarfed by the number of applications those schools receive. Last year, according to the Association of American Medical Colleges, just under 42% of the 48,010 applicants to U.S. medical schools enrolled.

The money will help St. George’s, which has programs in medicine and veterinary medicine, expand its global reach, said Chancellor Charles R. Modica. More than two-thirds of the 5,150 students in its four-year M.D. program are U.S. citizens, and almost all of them return to the U.S. for residency programs. Modica said he’s interested in growing the talent pipeline in places like Botswana, South Sudan and parts of Asia.

“We were at a point of recognizing that this could be so much more” than a training ground for U.S. doctors, Modica said. Building capacity for other international students who will then return to their home countries is “chapter two.”

Reuters reported last year that St. George’s was looking to sell itself for upwards of $1 billion, but Modica said the school was never aiming to sell itself outright. “This is my baby,” he said.

He said the funds will go toward scholarships, as well as marketing and outreach to attract future students.

It will also help grow St. George’s network of clinical rotation partners. The school pays about 70 affiliate hospitals to take students for third- and fourth-year clinical rotations, which help pave the way for residency placements. For example, it has a 10-year, $100 million deal for 600 slots at the New York City Health and Hospitals Corp., which runs 11 public hospitals.

St. George’s, founded in 1976, is perhaps best known for playing a part in the U.S.’s 1983 invasion of Grenada; shortly after a Marxist coup on the island nation troops evacuated nearly 1,000 Americans, many of whom were medical students at the university.

Many students who didn’t gain admission to mainland U.S. medical schools pursue degrees in the Caribbean instead, at schools like St. George’s, or Ross University School of Medicine in Dominica and American University of the Caribbean School of Medicine in St. Maartin, both owned by DeVry Inc. The programs tend to have higher price tags than their U.S.-based counterparts, and their outcomes vary widely.

The first-time pass rate for St. George’s students taking the first step of United States Medical Licensing Exam last year was 98%.

St. George’s, whose four-year medical degree has a price tag of $246,400, is eligible to receive federal financial aid dollars. Its medical and veterinary schools received upwards of $85 million in federal unsubsidized and Grad PLUS loans in the first quarter of calendar 2014.

Modica met Altas founder Andrew J. Sheiner about 18 months ago, and the deal formed from there, they said. Sheiner founded Altas in 2012 after working as a managing director at Canadian buyout firm Onex Corp. Its other main investment is NSC Minerals, a Saskatoon, Saskatchewan industrial salt provider.

Baring Private Equity Asia advises funds with upwards of $5 billion in committed capital.

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AUGUST 8, 2014 — MELISSA KORN, THE WALL STREET JOURNAL

The launch of peHUB Canada got me thinking – Canadian private equity has come a long way in a short time. A landmark year was 1983, when Gerry Schwartz founded Toronto’s Onex Corp. and acquired the Canadian subsidiary of American Can Co., then the largest leveraged buyout in domestic market history.

Onex went on to do bigger things, in part due to the leadership of Andrew Sheiner, who joined the firm in 1995. Eighteen years later, Sheiner retains a yen for innovation, leaving Onex in 2012 to found Altas Partners. I caught up with him recently and we spoke about the early days of private equity.

“I’m grateful for the opportunity to have worked at Onex,” he said. “Gerry and his team created a unique culture. From the beginning Onex pursued a strategy that was based on the principle that investments should be made using our own money and the firm’s capital. And Onex continued this practice as it evolved to managing third-party partnerships.” (Onex committed US$1.2 billion to the US$4.7 billion Onex Partners III LP, which closed in 2010.)

“Onex is one of the best private equity firms in the world today largely because of this principle,” he added.

In his nearly two decades in private equity, Sheiner has made note of some significant changes. For example, in the 1980s and 1990s, “private equity was an entrepreneurial business,” he said. “Now it’s an asset class. It’s a global industry, institutionalized by a large limited partner community and supported by a massive number of service providers.”

Additionally, private equity has become “homogenized,” in Sheiner’s words. He pointed to the in influence of the traditional limited partnership model, which drives market dynamics and which has not changed much over time. “Because all buyout firms operate through identical fund structures, and because they’re compensated in the same manner, virtually all of them do the same thing,” he said. “They acquire a company, improve it, and then sell it within three to five years.”

While Sheiner says he believes the traditional mode of private equity investing remains viable, he also thinks its locked-in behavior of buying and selling overlooks a great many opportunities. “There’s no magic in five years,” he said. “Great businesses are hard to buy. If you are fortunate enough to own one, and that business continues to perform strongly, you should be careful about selling it.”

This perspective may resonate with LPs. As the owners of private equity-backed assets, some limited partners are frustrated when quality companies are sold too early, in their estimation. Sheiner said LP frustration has increased in the post-2007 market environment and its heavy reliance on sponsor-to-sponsor deals.

“There’s a mismatch between many private equity firms and LPs,” he said. “Institutional investors need options for longer-term ownership and for ownership strategies that make more effective use of their capital.”

Sheiner said he has repeatedly heard this message from LPs and that is what convinced him of the need for a new type of buyout firm. “When innovating, sometimes you need a blank sheet of paper,” he said. The result was Altas Partners.

Altas collaborates with investors that share its orientation. The firm’s model features less imposing fees, less utilization of leverage in deals, and longer-lasting majority stakes in diverse North American companies that are “hard to replicate,” Sheiner said. All aspects of the Altas Partners’ culture – such as the structure of management, compensation and the selection of advisors – are designed to align with the firm’s novel approach to ownership, he notes.

Since its founding last year, Altas Partners has grown to a team of seven professionals, has secured its first backer and is looking to invest up to US$500 million in high-quality businesses, Sheiner said.

As might be expected, he is bullish about Canadian private equity. “The Canadian market has emerged strongly and consistent with the size and stability of the economy,” he said. “It’s a very attractive market, though it remains under-served.”

Sheiner is particularly proud of the market role played by ONCAP, established by Onex in 1999. He is also proud of the relationship he developed with Michael Lay (ONCAP’s managing partner, and formerly of Teachers’ Private Capital). He said the two worked closely to build ONCAP into “one of the pre-eminent mid- cap firms in North America.”

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KIRK FALCONER, PE HUB

TORONTO PRIVATE EQUITY FIRM HIRES PROVIDENCE VETERAN

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Toronto-based Altas Partners, a private equity firm trying out a new model with longer-term investments, has hired a veteran of top U.S. telecom buyout fund manager Providence Equity Partners.

Altas Partners, founded by long-time Onex Corp. executive Andrew Sheiner, this week brought in Scott Werry as a principal.

Providence is perhaps best known in Canada for partnering with Ontario Teachers’ Pension Plan to very nearly acquire BCE Inc. in the world’s largest leveraged buyout, just as the financial crisis was beginning. (For a while, Onex was part of a rival consortium stalking BCE but backed out.) Mr. Werry had been with Providence since 2005, and looked in particular at investments in communications and business services. He was a director of Canada’s Q9 Networks, which was acquired last year by BCE, Ontario Teachers, Providence and Madison Dearborn Partners – basically the same group behind the BCE buyout plan.

Before that, he worked at an investment banking firm known as McColl Partners.

Altas is focused on investments of $75-million to $500-million, and says its model can provide returns that are similar to “traditional” private equity funds but with lower risk.

The idea is to own companies for longer than the regular period of roughly five years, with less debt, and emphasize multiples of invested capital as a yardstick.

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BOYD ERMAN, THE GLOBE AND MAIL