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Advarra fetches about $5B in Blackstone and CPP buyout

Jun 13, 2022
Illustration of a microscope with shapes and dollar elements.

Illustration: Gabriella Turrisi/Axios

Blackstone and CPP Investments announced late on Friday that they're taking a majority stake in Advarra, a Columbia, Md.-based drug research services firm.

  • Financial terms were not disclosed but Axios confirmed that the final price was around $5 billion.

Why it matters: This is one of private equity's most anticipated and largest announced deals in North America health care so far this year.

  • The deal reflects investors' continued eagerness to support life sciences innovation without taking on direct molecule risk. According to sources, the valuation meets the expectations of the current owner Genstart Capital Partners.
  • The deal's hefty valuation is an example of the scarcity of multibillion-dollar buyout opportunities in play.
  • As one pharma services banker said during the Advarra process, "Everyone is hyper focused on Advarra because what else is there?"

By the numbers: The roughly $5 billion price tag implies a multiple of nearly 25x EBITDA.

  • That indicates tremendous growth in value under San Francisco-based Genstar, which agreed to buy the company in mid-2019 at an approximately $1.3 billion enterprise value, or around 18x EBITDA.

Details: Advarra provides regulatory, quality and compliance solutions, as well as clinical trial workflow technology to support life sciences R&D.

  • Blackstone is investing through its long-hold private equity vehicle alongside CPPIB, while Genstar Capital (majority) and Linden Capital Partners will stay on as minority investors.
  • Jefferies advised Genstar and Advarra, while Goldman Sachs advised Blackstone.

State of play: Advarra is one of two large institutional review boards, the other being Leonard Green's WCG. IRBs are formally designated by the FDA to review and monitor biomedical research involving human subjects.

  • Blackstone has a deep track record in pharma services, with recent investments including Precision Medicine Group and Cryoport.
  • The firm was also at the finish line in the 2019 process for WCG, one source says, making it a logical suitor of Advarra.

The bottom line: Amid a measured slowdown in the pace of new (and scale) health care deals in play, investors are stepping up to pay full prices for those they deem to be premier assets.

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