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The Deal: Bain, TPG Get Windfall With Quintiles IPO

NEW YORK ( TheDeal) -- Quintiles Transnational Holdings (Q - Get Report) raised about $947 million for its private-equity backers including Bain Capital Partners and TPG Group as research services company held its public offering at $40, and then proceeded to rise.

Shares were little changed Friday at $42.07 after gaining 5.3% on Thursday, the company's debut on the New York Stock Exchange. The offering valued the Durham, N.C.-based provider of contract research services for the biotech and pharmaceutical markets at $5.2 billion.

Together with Bain and TPG Capital, London-based 3i Group plc and Singapore state-owned asset manager Temasek Holdings Pte. Ltd. sold 10.6 million of the shares in the IPO while Quintiles sold 13.1 million shares. Underwriters have an option to purchase an additional 3.5 million shares.

"The offering was very well received," Quintiles spokesman Phil Bridges said Thursday. "We don't expect any major changes in the management of the company, ownership or strategic direction."

The company said in regulatory filings that it realized about $525 million in proceeds after expenses.

Quintiles said it would use proceeds from the offering to pay down credit facilities and other loans. It intends to use about $306 million to pay all amounts outstanding under a $300 million term loan, $50 million of the net proceeds to repay indebtedness under about $2 billion in senior secured credit facilities and around $25 million for management severance packages and general corporate purposes, including strategic growth opportunities.

"Going public is really a change in our capital structure. It provides return on investment for our shareholders and debt retirement," Bridges said.

At $40 per share, the company's PE owners raised a total of $269.4 million, without including the underwriters' option. Only TPG is selling shares to the underwriters. If the option is exercised, TPG would sell an additional 1.4 million shares, bringing total proceeds to $270.8 million.

As a result of the offering, Bain's stake in Quintiles was cut to 18.6% from 22.9% and 3i's dropped to 12.3% from 15.1%. TPG's stake was cut to 18.6% from 22.9%, but if the underwriters' option is exercised, its stake will drop further to 17.5%.
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