Investment in US-headquartered CRO operator capitalising on Cinven’s global healthcare investment expertise
International private equity firm, Cinven, today announces that it has successfully completed the final sell down of its remaining shares in Nasdaq-listed Medpace (‘the Group’), a leading contract research organisation (‘CRO’). Following this transaction, Medpace becomes a fully realised investment for Cinven, generating highly successful returns for the Fifth Cinven Fund.
Headquartered in Cincinnati, Ohio, Medpace is a global CRO operator providing management services to the R&D departments of pharma, biotech and medical device clients to help plan and oversee their clinical trials. Medpace focuses on small to mid-size companies and has significant expertise in numerous therapeutic areas, operating across 36 countries worldwide.
Cinven’s Healthcare team identified the CRO industry as an attractive market in which to invest. Following its detailed sector review work, Cinven acquired Medpace in February 2014 for a total consideration of US$915 million.
During Cinven’s ownership of Medpace, strong progress was made by Medpace’s industry-leading management team across a number of key pillars of Cinven’s investment thesis:
- International expansion: Medpace continued to expand significantly outside of the US including in Europe and Asia;
- New therapeutic areas: Medpace successfully developed its therapeutic franchises including anti-viral/anti-infective and oncology, and consolidated its position in existing therapeutic areas, such as metabolic and cardiovascular, as well as later-stage trials; and
- Investment-led growth: Significant investment was made into Medpace’s human capital and infrastructure to position the Group for further growth. In particular, Cinven enabled the senior management to make the strategic hires necessary to grow the business. Medpace’s workforce increased by more than 55% during Cinven’s investment, with the number of employees growing from approx. 1,500 in 2014 to 2,700 today.
As a result, Medpace delivered strong financial performance under Cinven’s ownership, driven by trading growth momentum, industry-leading margins and strong cash conversion.
On the back of this strong performance, in August 2016, Medpace achieved a highly successful all-primary IPO on the Nasdaq Global Select Market at US$23 per share. Medpace’s share price has performed well in the aftermarket, and Cinven has monetised its investment in Medpace through a series of sell downs, culminating in the final sell down on 22 August 2018 at a c.138% premium to the IPO price.
Commenting on the transaction, Alex Leslie, Partner in Cinven’s New York office, said:
“Cinven’s investment in Medpace stemmed from a high conviction thesis that we developed within Cinven’s Healthcare Team, which anticipated strong growth in the CRO industry fuelled by increased R&D spending by the pharma industry and the growing complexity and number of clinical trials required to bring new molecules to market.
“We expected this would be especially pronounced in the smaller pharma and biotech segments of the market, where Medpace focuses. This thesis has played out and has resulted in Medpace delivering an excellent returns.”
John Richardson, Senior Principal in Cinven’s New York office, added:
“Cinven backed a strong management team at Medpace, led by CEO, Dr August Troendle, and invested significantly in his team and the Group’s infrastructure, including IT systems and clinical operations. Medpace is a strong example of Cinven’s successful sector / regional approach – how the Cinven Healthcare and US teams have worked closely together to grow a business and generate highly attractive returns for Cinven’s investors.”
The transaction is expected to close on or around 27 August 2018 subject to customary closing conditions.
The final realisation of Medpace follows Cinven’s recent successful exits of CeramTec, CPA Global, Viridium Group and Ufinet Group.