3i exits Labco to Cinven in €1.2bn SBO

3i announced it will receive £41m from the sale of its 17.22% stake in the company – £5m more than the £36m its holding was valued at in March 2015. However, the listed firm has not disclosed the additional amount to be reaped by the funds it manages.

The sale follows the announcement by Labco in April 2014 that it would list on the Paris stock exchange. In early May, the company's shareholders revealed they had decided to scrap the IPO plans in favour of an exit to Cinven because of volatility across global financial markets.

The intention at the time was to raise between €440-474m with the public offering, €320m of which would come from new share issuance and between €120-154m from the sale of existing shares.

Labco's new majority shareholder, Cinven, financed the investment via its €5.3bn fifth fund. Announced in August 2011 with a €5bn target, the buyout vehicle closed in June 2013. According to unquote" data, it targets deals valued at more than €100m in the business services, financial services, healthcare, industrials, retail, technology, media and communications sectors.

According to the GP, its interest in Labco stems from the company's diversified business model and position in medical fields including anatomical pathology, genetic testing and nuclear medicine.

Cinven was also attracted by Labco's growth potential within a "highly fragmented" European diagnostics laboratory market. According to its estimates, clinical laboratories currently represent only 1% of healthcare costs on the continent, while expenditure in prediction, prevention and diagnosis is expected to increase from 20% to 30% of European healthcare costs by 2020.

The deal marks the 12th investment in a healthcare company by Cinven, which claims to have deployed a total of €3bn in the sector. Prior deals by the GP include Spanish hospital network USP Hospitales in 2007, as well as UK pharmaceutical companies Mercury Pharma and Amdipharm in 2012.

In June 2014, Cinven sold French medical equipment provider Sebia to Montagu Private Equity and Astorg Partners. The firm reaped a 2.4x return on its original investment.

Previous funding
3i's sale of Labco takes place almost seven years after it entered the company's capital structure via a €200m funding round alongside TCR, Omnes, Natixis Investment Partners, CIC Finance and Electra Partners in July 2008. Contributing €140m to the round, at the time, the listed firm stated it would help finance the business's international development via a buy-and-build strategy.

Following the deal, non-executive chairperson Andreas Gaddum and non-executive director Daniel Bour joined Labco's management board. The company was then backed by its shareholders when it issued €500m in high-yield bonds in 2011 and two further €100m add-on notes in 2013 and 2015.

Labco claims a threefold increase of its turnover from €212m in 2007 to €650m via more than 130 bolt-on acquisitions. At the same time, international sales have reportedly jumped from 25% to 50% of total sales.

Company
Founded in 2003 by Eric Souêtre and Stephane Chassaing, Labco is a medical diagnostic service provider. Headquartered in Paris, the business carries out clinical tests and handles the delivery of results from a network of 160 laboratories and 1,000 collection centres in France, Spain, Italy, Portugal, Belgium and the UK.

Employing a workforce of 6,000, Labco claims more than 150 million tests are performed each year, with pro forma revenues nearing €650m and EBITDA of €131m in 2014.

People
Cinven was represented by partner Stuart McAlpine and senior principal Alex Leslie, while 3i managing director Rémi Carnimolla and director Guillaume Basquin led the deal for the listed GP. Philippe Charrier is CEO at Labco.

Advisers
Vendor - Rothschild (Corporate finance); Weil Gotshal & Manges (Legal).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• France
• Buyouts
• Exits
• Healthcare
• France
• Secondary buyout
• Cinven
• 3i
• TCR Capital
• Unq2015June