PPD files for IPO 8 years after going private in $3.9B deal
In 2011, PPD was one of a pack of major contract research organisations (CROs) that traded on public markets. Back then, Quintiles, now known as IQVIA, was the one notable exception to the rule that big CROs were publicly traded.
PPD followed Quintiles off public markets after The Carlyle Group and Hellman & Friedman, backed by four banks, made a $3.9bn (€3.5bn) offer for the CRO.
Now, PPD is set to return to public markets. The CRO is yet to set the set the financial terms of the initial public offering (IPO) or make public the associated paperwork, which will provide a window into its performance over the past eight years.
PPD has shared a brief look at how it will use the money it plans to raise in the IPO, stating, “PPD expects to use the proceeds of the offering for general corporate purposes, which may include the repayment of indebtedness.”
Earlier this year, S&P Global Ratings said PPD has “a history of debt-financed shareholder dividends” and an “aggressive financial policy.” S&P made the comments after PPD outlined plans to issue $900m in unsecured notes to fund a $1bn dividend.
The IPO is likely to value PPD at a higher price than the fee its private equity buyers paid. In 2017, the recapitalisation of PPD, which generated around $550m, valued the CRO at $9bn.
If PPD achieves or exceeds that valuation in its IPO, it will become one of the most valuable CROs on public markets. IQVIA and LabCorp, which owns Covance, have market caps of $28bn and $16bn, respectively, but are involved in areas well outside of the traditional scope of the CRO industry.
The market caps of Icon, PRA Health Sciences and Syneos Health range from around $5bn to $8bn. Parexel, one of the clutch of CROs on public markets back in 2011, was taken private in a $5bn deal in 2017.
PPD’s increased valuation represents the growth it has achieved as a private company. By the time of the 2017 recapitalisation, PPD’s revenues were up 70% on the amount it generated before going private in 2011, according to Carlyle.
Reflecting this, the CRO has also grown its headcount significantly. PPD ended 2010 with around 11,000 employees; today, PPD employs around 23,000 people.
