Apax has agreed to buy Marken, a company specialising in clinical trial logistics, alongside the company’s management for £975 million (€1.08 billion; $1.6 billion) from Intermediate Capital Group.
The buyout firm has underwritten the entirety of its portion of the deal's financing with equity from its €11.2 billion Apax Europe VII fund and will now talk to banks to put a debt package in place before the deal is scheduled to complete in early 2010.
The deal will, if it completes, be the largest buyout in the UK since the £1.1 billion acquisition by Lion Capital of FoodVest Group in July 2008. It would be the fourth largest in Europe, according to data provider Dealogic.
The size of the deal underlines a level of hints at returning confidence to the buyout market, while the all-equity nature of the initial agreement emphasises the fact that private equity firms have had to adapt their investment methods to get deals done.
A few buyouts this year – such as Exponent’s acquisition of Ambassador Theatre Group and Gresham’s acquisition of talent agency James Grant Group – have been fully underwritten by their financial sponsors.
“It has been done a few times this year as a tactical means to close down processes,” said Jacques Callaghan, managing director at investment bank Hawkpoint, who added that the trend was being driven by high levels of competition among financial sponsors chasing a limited number of deals.
Earlier this year Apax chief executive Martin Halusa outlined the necessity to write larger equity cheques. “In this environment, where banks have scaled back their lending, the percentage of our own equity that our funds use to back companies will increase. Indeed, many investments will be equity only,” he wrote in the firm’s annual report.
Apax’s nearest competitor in the pursuit of Marken was US buyout firm Hellman & Friedman, a source with knowledge of the process confirmed.
Healthcare is one of five sectors in which Apax invests. Its other recent healthcare investments include UK hospital operator General Healthcare Group, pan-European hospital group Capio and Indian hospital group Apollo.
Khawar Mann, partner and global co-head of Apax’s healthcare team described Marken as a “world-leader” in clinical logistics services and as “poised for substantial growth” as a result of globalisation.
Apax is currently in negotiation with sovereign wealth fund China Investment Corporation over a potential investment in its latest fund – Apax Europe VII. The deal would allow certain investors in the fund to waive their uncalled commitments to the vehicle and would also see CIC take a minority stake in Apax Partners.