Inflexion in 2.8x pharma exit

The UK-based firm has agreed to sell Phlexglobal to Bridgepoint Development Capital for £42m

Bridgepoint Development Capital, the small-cap arm of UK-based upper mid-market investor Bridgepoint, has agreed to acquire pharma technology business Phlexglobal from UK-based Inflexion Private Equity.

The firm will buy the business for £42 million (€53 million, $72 million), according to a statement. Lloyds Bank has provided senior debt and working capital facilities for transaction.

The divestment will yield a 2.8x return for Inflexion, which backed the business in March 2011, the firm said in a separate statement. The firm originally made the investment from its 2006 fund, a £165 million vehicle.

Phlexglobal, a technology services company to the pharma industry, provides software and services to global pharmaceutical and biotech sponsors and clinical research organisations. The business was founded in 1997, has offices in the UK and the US, and employs 230 people. For the year to December 2013, Phlexglobal reported revenue and EBITDA of £15.3 million and £4.5 million respectively.

“We are proud that under our ownership Phlexglobal has doubled profits, expanded its international footprint and strengthened its service capability,” Simon Turner, managing partner at Inflexion, said.

The number of active pharma research and development projects worldwide has grown by approximately 2 percent per annum, according to BDC. The firm expects this market segment to grow at around 5 percent per annum over the next five years, since an increasing proportion of the market is being outsourced.

BDC focuses on buyouts and growth capital investments in businesses with an enterprise value of between €20 million and €150 million. It usually invests €10 million to €75 million of equity per transaction.

Last month, BDC sold Pulsant, an IT infrastructure service provider to Oak Hill Capital Partners, generating a 3.1x return. In March, BDC acquired Thinking Group, a marketing services and technology company, for £28 million.

The firm is currently investing Bridgepoint Development Capital II, a €353 million fund which it raised last year. Bridgepoint is also investing its larger flagship fund, which targets businesses with enterprise values between €150 million to € 1 billion.

Inflexion is currently investing its latest buyout fund, a £375 million, 2010-vintage. In January, the firm acquired a majority stake in Succession Holdings Limited, a UK-based wealth management business.

Last month Inflexion listed FDM Group, a UK-headquartered IT services company on the London Stock Exchange, netting the firm a 16.2x return. In May, Inflexion booked a 3.6x on the listing of National Accident Helpline, while in January, it sold Optionis Group, a UK employment services company, which yielded a 3.5x return.