PAI returns to deal-mode

An exit coupled with a secondary buyout mark a return to ‘business as usual’ for the Paris-based firm, following its dramatic fund downsizing and management reshuffle.

European private equity group PAI Partners has returned to “business as usual”, a spokesman for the firm said Wednesday, following news of PAI’s first investment since its fund was halved in size in December 2009.

Investing what is now a €2.7 billion fund, PAI has marked its return to deal-mode with an agreement to buy a majority stake in Cerba, a France-headquartered clinical laboratory business currently owned by IK Investment Partners, another European private equity firm. No financial details were disclosed and no timeline was indicated.

The sale will return LPs in IK’s 2004 fund twice their invested capital, said a source close to the transaction. IK declined to comment on the returns to be generated.

IK has held Cerba since 2006 and has grown the business both organically and via a series of acquisitions. In 2007 Cerba acquired BARC Group, a Belgian routine testing laboratory as well as a worldwide clinical trial testing laboratory. Following further bolt-on acquisitions, the group employs more than 1,300 people and forecasts a turnover of €250 million for 2010.

PAI’s investment in Cerba follows last week’s IPO of CHR Hansen, a biosciences firm it took private in a 2005 deal that valued it at around €1.1 billion. Last week’s IPO raised proceeds of DKK3.2 billion (€430 million; $513 million) for the company and gave the business a market capitalisation of DKK 12.4 billion. PAI retains a stake of 59.6 percent.

The return to the business of making and exiting investments follow a turbulent period for PAI. The shock departure of chief executive Dominique Megrét in September, and his replacement with Lionel Zinsou, led to a protracted period of negotiation – during which the fund’s investment period was suspended – while LPs debated what should become of the €5.35 billion fund. Ultimately the fund was slashed to €2.7 billion.