LONDON: Europe’s largest leveraged buyout this year wasn’t done by a Wall Street giant like Blackstone Inc or KKR & Co.
Instead, it’s from a lesser-known British private equity (PE) firm that manages just €12bil.
London-based CapVest Partners announced on Monday it will buy control of German drugmaker Stada Arzneimittel AG in what’s by far its largest-ever purchase.
The acquisition, which values Stada at around €10bil, caps a few furious days of around-the-clock negotiations as CapVest raced to seal a deal with the drugmaker’s owners at Bain Capital and Cinven.
The transaction marks the latest example of a mid-market PE firm seeking to do an acquisition multiple times the size of anything it’s ever done.
The deal vaults CapVest into the private equity big leagues at a time when limited partners are getting increasingly picky about which firms they back, focusing their time on the biggest shops.
Retail turnaround specialist Sycamore Partners pulled a similar feat earlier this year when it bought drugstore owner Walgreens Boots Alliance Inc for US$10bil.
It’s deals like these that have helped the volume of private equity transactions rise 38% this year to US$1.1 trillion, according to data compiled by Bloomberg.
For Bain and Cinven, it represents an important milestone as they seek to show they can return capital to their investors at a time when some funds are struggling to exit their portfolio companies.
The divestment also removes the need for them to navigate tricky initial public offering markets amid heightened volatility and a lack of sizeable listings in Europe.
CapVest had long been hunting for a health care purchase that it could use as a platform for future acquisitions, following the formula it’s been using at companies like snack maker Second Nature Brands and pet food group IPN.
Earlier this year it looked at Karo Healthcare, a consumer health company owned by EQT AB that was eventually sold to KKR in a €2.5bil-plus deal, people with knowledge of the matter said.
After failing to buy Karo, it turned its focus towards Stada.
The Stada deal was led by CapVest principal Matt Fargie, a former Centerview Partners M&A banker in his early 30s, and senior partner Kate Briant, a healthcare specialist who hails from South Africa and was part of the founding team that came from Bankers Trust’s private equity arm to start CapVest in 1999. — Bloomberg
