PEP and Carlyle team up in $930m Aus pharma deal

The pair intend to develop new products for iNova, expand its geographical footprint and also acquire new brands.

Pacific Equity Partners and The Carlyle Group have teamed up in a 50/50 partnership to acquire Australian pharmaceutical company iNova from current owner, Quebec-headquartered Valeant Pharmaceuticals, for $930 million in cash.

Sydney-based PEP is currently deploying its fifth fund, an A$2.1 billion ($1.6 billion; €1.4 billion) vehicle that closed on its hard-cap in September 2015.

Carlyle invested from Carlyle Asia Partners IV, a 2013-vintage fund that closed on $3.9 billion, that has also backed healthcare companies such as Chinese hospital group Zhongmei Healthcare Group, Shanghao-based medical solutions provider and MicroPort Scientific Corporation and Mumbai-based diagnostic chain Metropolis Healthcare.

iNova manufactures and develops a portfolio of prescription and over-the-counter products in areas such as weight management, pain management, cardiology and cough and cold treatment. It operates in more than 15 countries around the world, holds leading market positions in Australia and South Africa and has an established platform in Asia.

The company was previously owned by Australian private equity duo Archer Capital and Ironbridge Capital, before it was sold to Valeant for A$700 million in 2011.

Carlyle managing director David Bluff said in a statement it will support iNova to deliver innovative products and quality customer service. David Brown, MD for PEP, added the firm’s investment will be used to develop new products, geographical expansion as well as potential acquisitions of new brands.

Valeant put the business up for sale as part of a global debt reduction program, which has seen the company slash debt by $3.6 billion in the past 12 months.

“The sale of iNova is part of the company's ongoing efforts to both simplify our operating model and strengthen our balance sheet,” said Joseph Papa, chairman and chief executive officer of Valeant.

The transaction is expected to be completed in the second half of 2017.

PEP and Carlyle have been advised by Gilbert + Tobin, Allier Capital, Credit Suisse, Bank of America Merrill Lynch, UBS and Macquarie Bank.