Partners joins with PSP on Cerba acquisition

The duo is acquiring the laboratories business from PAI Partners in a €1.8 billion deal.

Partners Group has teamed up with the $113 billion Canadian pension investment manager PSP Investments on one of its largest European direct private equity deals.

The pair have agreed to acquire laboratory operator Cerba HealthCare from French private equity house PAI Partners and company management in a deal valuing the business at around €1.8 billion.

When the deal is completed, Partners Group will be the majority equity holder, with PSP holding a significant minority stake. The firms will manage the investment together, working alongside Cerba’s management team, led by chief executive Catherine Courboillet.

Partners Group is making the investment from several of its funds, including an allocation from the €1.5 billion Partners Group Direct Investments 2012, which closed in February 2014, as well as from client mandates.

The firm is currently in market with the successor to that fund, Partners Group Direct Equity 2016. The vehicle has received commitments from Strathclyde Pension Fund, which committed £66 million ($82 million; €77 million), and Staffordshire County Council Pension Fund, which committed £10 million, according to PEI data.

PAI acquired Paris-headquartered Cerba, an operator of clinical pathology laboratories, in 2010 in a deal valuing the business at €551 million, according to the firm’s website. The firm invested in the business using capital from PAI Europe V, a €2.7 billion vehicle.

According to media reports the sale could generate a return of more than 2x for investors in PAI Europe V.

PAI Europe V has returned more than 110 percent of its capital to investors to date at an average of 2.4x money, it is understood.

The majority of the company’s revenues are generated via routine lab tests, although it also offers specialty lab testing for more complex medical diagnoses and testing services for clinical trials.

Cerba's clients include private patients, physicians, labs, hospitals, retirement and nursing homes, and pharmaceutical and biotech companies. The company generated revenues of around €630 million in 2016 and employs almost 4,300 people.

Plans for the business include continuing its M&A strategy in the French market and internationally, as well as accelerating organic growth and development in other segments, Partners Group said.

The deal is almost the same size as the acquisition of French residential management services provider Foncia, on which Partners Group teamed up with CDPQ and CIC Capital Corporation last summer. At the time it was the firm’s largest European direct deal.