The Outsourcing Pharma website is reporting that London headquartered Cinven, one of Europe’s biggest private equity (PE) firms, confirmed on the morning of February 24 that they had agreed a $925million deal to acquire Ohio-based contract research organisation (CRO) Medpace from CCMP Capital Advisors.
The capital to complete this deal will come from Cinven’s latest fund, which closed with $7.3billion in cash raised last year. Consolidation has been the buzzword in CRO for the last few years. While many mid-sized pharmaceutical firms, both in the CRO market and elsewhere, have been merging, Medspace have been quietly growing their market share and employee presence in Europe, with around 40% of their operations now based here.
Cinven cited growth opportunities for Medspace within Europe and eventually looking towards Asia as an important reason behind the purchase.
Reuters had previously reported on February 23 that a deal was imminent, stating that Cinven would be delighted to get this deal over the line having missed out to other large firms during attempted buyouts in 2013.
The reported deal value will return over three times CCMP’s initial investment in the company. Given that CCMP have only held Medpace for three years, it is a positive sign both for buyout firms and for PE investors that there are returns to be made even on short-term commitments.
This deal could be a key indicator for the whole PE marketplace given the way many firms are starting to look only at longer-term deals, which in the short-term could potentially lead to a reduction in deal making and fund raising. As well as seeing this return, CCMP are currently fundraising themselves, with Reuters also reporting the firm is close to its $3.5billion target.
It is unknown at this stage whether CCMP and Cinven will be continuing to target pharmaceutical companies and CRO with their respective funds.