Deal in Focus: Adelis in DKK 250m buyout of SSI Diagnostica

Swedish mid-market GP Adelis has acquired Hillerød-based diagnostic pharmaceuticals company SSI Diagnostica from the Danish government. The deal was at the lower end of the GP's target size range, and saw it tap its 2013-vintage €410m Adelis Equity Partners Fund I for equity. The buyout was leveraged at around 50% with a regional Danish bank providing an all-senior loan and RCF.

Adelis partners Steffen Thomsen and Rasmus Molander led the deal, utilising some of the knowledge Thomsen amassed from previously dealing with the Danish government during his time at the helm of 3i's Nordic team: he led 3i and Allianz's buyout of Scandlines in 2007 and spent five years as vice-chair of the ferry service's board.

For Thomsen, state-owned companies can have a lot of hidden potential: "There are certain things that are difficult to do in publicly owned companies. There is a duty of service, but not the will, capital and perhaps knowledge to make the most commercial use of it - and there is no expectation to do so, either."

SSI Diagnostica is one of two companies under Statens Serum Institut. Diagnostica will become a wholly independent company as part of the deal - still subject to the approval of the state's finance council - and independent from the other, larger part of SSI, which produces a range of vaccines and has been loss-making for several years.

The previous Danish government decided to privatise in late Autumn 2014, though it was not until the Spring of 2015 that a sales process was formally launched, with EY and Accura at the helm.

"We were interested from the beginning," says Thomsen. "Adelis focuses on assets that are somewhat 'odd' and complex, and from the earliest phase it was clear to us that SSI was extremely niche and very scientifically complex within healthcare."

Thomsen believes SSI to some degree flew below the radar of the major strategic buyers and the non-local sectorial PE players, because of its extremely niche focus.

Diagnostica's areas of business include in-vitro diagnostics with a primary focus on clinical microbiology, quality control of vaccine production, and salmonella and streptococcus antibodies.

Thomsen says the GP saw an opportunity to position itself in a niche with a relatively small company that has the need for sectorial expertise and local knowledge, which it can offer - both from within Adelis and through its adviser network.

Stagnation inoculation
Statens Serum Institut was founded in 1902 as a research institute focused on preventing and fighting infectious diseases, congenital disorders and biological weapons threats. It employs a staff of 90 and had revenues of around DKK 150m last year.

The century-old history of SSI was among the attractions for Adelis, because it has been part of the development of Copenhagen as a global hub in SSI's field.

"SSI has a great history centred on the Copenhagen area and with the Danish state as the prime driving force," says Thomsen. "The city has carved out a little niche in pneumonia vaccines and has world-beating knowledge in the field that is recognised by the largest vaccine producers - and SSI is known for that."

As the new owner, Adelis will focus on leveraging the existing competences at SSI Diagnostica and its product portfolio. "The company has operated in a more reactive way, with little effort put into pushing substantial sales, in part due to a limited marketing budget," says Thomsen.

While the GP says it is open to considering add-ons acquisitions for SSI Diagnostica in the future, it is not a primary concern and Thomsen believes there is no immediate need for acquisitions to grow the company: "With a 100-year history and that level of recognition in the global market, we see a clear potential to commercialise the business to a larger extent than it has been before."

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• Topics
• Buyouts
• Nordics
• Healthcare
• Adelis Equity Partners
• EY (Ernst & Young)
• Denmark
• Deal in focus