LDC makes 3x money on Penn sale

The deal extends Packaging Coordinators' capacities in the development and commercialisation of medicines.

The exit is the seventh completed by LDC in the last 12 months. Last month, the GP sold internet services provider Metronet to Isis Equity Partners in a £45m tertiary buyout, generating a 4x return.

Previous funding
In 2007, LDC made a £33m investment to acquire Penn from Gresham, which reaped a 12x money multiple via the sale. The secondary buyout valued the business at £67m, according to unquote" data, and included a debt package supplied in three tranches by HSBC. There was no mezzanine involved in the deal.

EY was appointed by the vendor to conduct a process to dispose of the business and approached a select number of prospective buyers.

Gresham's involvement in Penn was a three-stage process, according to unquote" data. In 2000, Gresham acquired Penn in a £12m management buyout from its private shareholders, taking a majority stake alongside management and a roll-over investment from one of the vendors. At that stage, Penn was a service business for drug delivery, which took pharmaceuticals from concept and formulation through to clinical trial packaging, distribution and early-stage manufacturing. Alongside developing this service business, Penn focused on commercialising its product portfolio.

This culminated in a partial disposal of Penn's product activities (Penn T) to Cellgene, a US Oncology business. The transaction, completed in October 2004, was worth £62.5m and represented an IRR of 75% and a money multiple of 8x for Gresham. The divestment of Penn T to Cellgene was structured so that Gresham simultaneously re-backed Penn's management in a secondary buyout of the remaining product-focused part of the business, still called Penn Pharmaceuticals.

Company
Founded in 1979 and based in Tredegar, south Wales, Penn provides contract development and manufacturing organisation services to customers in the pharmaceutical and biotech sectors. It has clients in the US, Europe and Japan.

In 2013, the company opened a new contained manufacturing facility in south Wales, enabling it to produce tablets and capsules containing highly potent compounds.

Under LDC's stewardship, the company's turnover has risen from £17m to more than £30m, with a 51% EBITDA increase across the same period. Penn's headcount has also risen to 300, marking a 47% increase since LDC's investment.

People
Candida Morley and Peter Latham worked on the deal for LDC, operating out of the firm's Bristol office.

Advisers
Vendor – Osborne Clarke (Legal); EY (Corporate finance).

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• Topics
• UK / Ireland
• Healthcare
• Exits
• United Kingdom
• LDC
• Gresham Private Equity