LGV leads science unit secondary

Legal & General Ventures has acquired the Laboratory of the Government Chemist from 3i in a secondary deal backed with senior debt from HSBC, Bank of Ireland and SG Corporate and Investment Banking.

Legal & General Ventures (LGV), the European private equity business owned by UK insurer Legal & General Group, has agreed to pay £70m to acquire the Laboratory of the Government Chemist (LGC), the chemical and biochemical analysis specialist in a secondary transaction from 3i.

In addition to carrying out its role as the UK’s national measurement laboratory for chemical and biochemical analysis, LGC provides analytical and diagnostic services to clients in the public and private sectors and distributes analytical and biological reference standards across Europe. The company undertakes BSE testing, the genotyping of sheep to eradicate scrapie and food quality analysis.

At the time of the original buyout by 3i in 1996, LGC was valued at £5m, although the past seven years has seen a series of acquisitions. Earlier this year, the business set up its first research laboratory outside the UK, acquiring Germany-based Mikromol.

“LGC is an ideal fit for the LGV portfolio,” said Brian Phillips, managing director of LGV. “LGC is the leader in its core markets and has a dynamic workforce operating in growing markets. LGV’s ‘buy and build’ focus is ideal for LGC at this stage in the company’s development.”

HgCapital and Barclays Private Equity were among the firms short-listed as potential buyers of the business, in an auction coordinated by Deloitte & Touche. Debt financing for the transaction was provided by a consortium of HSBC, Bank of Ireland and SG Corporate and Investment Banking.

In the seven years under 3i’s stewardship, LGC has increased turnover from £15m to £52m and the company has achieved a ten-fold increase in profit. Staff numbers have grown over the same period from 270 to over 700 today. 3i has not disclosed its return on investment, although Andrew Fraser, director of healthcare at 3i, said it had been a “very successful” investment.