FdG makes 8.1x on DentaQuest

The dental benefits administrator has bought back FdG’s investment for $110m, five years after selling it to the private equity firm for $12m.

FdG Associates, a New York private equity firm originally formed as an investment vehicle for the Fisher and de Gunzburg families, has sold its investment in DentaQuest, a dental benefits administrator, back to the company for $110 million.

The sale represents a return of 8.1 times for FdG, which first bought $12 million of convertible preferred stock in DentaQuest in May 2002.

At that time, DentaQuest was a newly created for-profit entity formed by Dental Service of Massachusetts, a not-for-profit entity doing business as Delta Dental of Massachusetts to pursue acquisitions outside Massachusetts in the dental benefits industry.

FdG’s initial investment was used to fund purchases of Consumer Dental Corp, Consumer Dental Care of Virginia and CDC Management, providers of managed dental care plans in Maryland, Washington DC and Virginia.

DentaQuest subsequently acquired Doral Dental, a third-party dental benefits administrator focused on the Medicaid market in 2004. The transaction added over six million new members in 18 states and doubled the size of the company.

FdG declined to disclose whether it provided additional capital to fund the acquisition of Doral Dental. In the initial agreement, FdG said it would provide up to $30 million in growth capital.

FdG’s spokeperson declined to comment on the transaction.

FdG, run by managing directors David GellmanMark Hauser and Douglas Dossey, closed its second private equity fund at $310 million in June 2005. The firm makes equity investments of between $15 million and $50 million in a variety of industries, including business and consumer services, distribution, light manufacturing, retail and consumer products sectors.