Cinven’s Fifth European Buyout Fund will be 65% invested following its acquisition of German laboratory operator Synlab from BC Partners for €1.7 billion, it is understood.
Cinven is expected to begin talking to investors toward the end of the year with a view to fundraising next year.
The Synlab acquisition is being made through Fund V, a €5.3 billion vehicle that closed in 2013. It follows Cinven’s announcement in May that the firm was acquiring Paris-based diagnostics company Labco from a consortium including 3i for €1.2 billion, as reported by Private Equity International.
Cinven plans to merge the two companies, which together will have an enterprise value of €2.9 billion and a combined entry multiple of about 9x.
BC Partners’ sale of Synlab follows an auction process and will generate a 2.7x return for the firm, it is understood. The firm acquired the stake in 2009 for €618 million, according to its website. Synlab made nearly 60 add-on investments during the investment period.
The combined entity will hold a market share of around 10 percent and pursue a buy-and-build strategy within its enlarged footprint, as well as organic growth, it is understood. Labco is focused on France, Spain, Italy, Portugal, Belgium and the UK, while Synlab operates in Germany, Eastern Europe, the Nordics, Turkey and the Middle East.
Cinven has pursued a similar strategy in the healthcare sector with its acquisition and merger of Mercury Pharma Group and Amdipharm in 2013, which now trades as AMCo.
Rothschild advised BC Partners on the Synlab transaction, while Cinven was advised by Barclays, it is understood.
Cinven and BC Partners declined to comment.