Private equity and venture capital investments in the pet care, food and supplies sector surged 659% year over year in 2023, with the value of announced transactions reaching $2.89 billion, the highest annual value since 2019, according to S&P Global Market Intelligence data.
The increase was driven by one transaction, Blackstone Inc.'s acquisition of Rover Group Inc., an online marketplace for pet care. The deal, announced in November 2023 and completed in February 2024, accounted for 74% of the transaction value.
The number of deals remained relatively stable, with 38 transactions announced in 2023 compared to 39 in 2022.
The sector is attractive for investment because millennials and Generation Z are prioritizing pets over parenthood and spending more on their pets' health, a trend driven by higher discretionary income, according to a 2024 report from investment bank Harris Williams.
Multiple tailwinds, including increased awareness of pet health, are driving demand for premium, sustainable and specialized products and services, Ryan Budlong, managing director of consumer group at Harris Williams, wrote in an email.
In 2024 up to June 18, investment in the sector cooled considerably. Deals announced during the period had an aggregate transaction value of $43.9 million, an 83% decline compared to the first half of 2023.
The deal count also decreased, with only seven recorded compared to 19 during the prior-year period.
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Largest deals
The largest deal announced in 2023 was Blackstone Inc.'s acquisition of Rover Group. The transaction was valued at nearly $2.15 billion at announcement.
In the second-largest deal, pet wellness company Dogmates Ltd., doing business as Butternut Box, raised $353.4 million in a round of funding led by General Atlantic Service Co. LP, with participation from existing investor L Catterton Partners.
Outlook for 2024
The deal environment in the pet sector is expected to remain positive.
Pet owners are spending more on services like daycare, boarding and grooming, especially as the travel industry rebounds and more companies return to in-person work, according to Budlong.
Additionally, pet food, treats and supplements, veterinary and overall pet care have opened new revenue streams. "Innovative pet categories are emerging with ample room to grow," Will Bain, managing director of the consumer group at Harris Williams, wrote in an email.
In June, Cinven Ltd. said it has agreed to sell a majority stake in pet food manufacturer Partner in Pet Food to funds managed by CVC Capital Partners Ltd. Completion of the transaction is expected before the end of 2024, according to a June 28 news release.