LONDON (The Deal) -- Buyout firm Cinven Ltd. said Monday it would buy a majority stake in medical contract research company Medpace in a deal which values the business at $915 million including debt and provides an exit for CCMP Capital Advisors LLC.
Cinven prevailed in an auction, beating late-stage bidders including GTCR LLC and Summit Partners with a deal to buy a roughly 80% stake. Medpace, of Cincinnati, generated adjusted Ebitda of $94 million in 2013 and was founded in 1992 by August Troendle, who is president and CEO, and who, with other managers, will hold the remaining shares.
Cinven said it expects strong growth in the contract research industry as clinical trials become more complex. It noted that the outlook for research and development expenditure is most positive for the smaller pharma and biotech companies which Medpace serves. Cinven said it wants to expand Medpace in its own geographical sweetspots of Europe and Asia and increase Medpace's business in newer sectors, including the metabolic, cardiovascular and central nervous system therapeutic areas.
"Cinven's healthcare team identified the CRO [contract research organization] industry as an attractive market in which to invest given its fundamental growth characteristics. The CRO industry consolidation has created a gap in the market serving the mid-cap pharma and smaller biotech players - where Medpace operates and where we intend to capitalize on organic growth opportunities," said Cinven partner Supraj Rajagopalan in a statement.
The buyout firm is financing the purchase with equity from its fifth, 5.3 billion euros ($7.3 billion) fund, which it closed last year, as well as with committed first-lien, U.S. dollar-denominated debt within a covenant-lite structure. The financing package is known to amount to about 55% of Medpace's $915 million enterprise value.