Private equity groups Carlyle Group and Hellman & Friedman took PPD private in 2011 in a takeover valued at $3.9bn (€3.5bn). Since then, PPD has made a series of acquisitions, helping to grow its sales by 95% between 2014 and 2018.
PPD revealed plans to return to public markets late last year, before going on to make its initial public offering (IPO) paperwork available earlier this month. Now, the contract research organization (CRO) has revealed the expected terms of the listing.
As it stands, PPD plans to offer 60m shares for between $24 and $27 apiece. At the midpoint of the range, $25.50, that would see PPD generate gross proceeds in excess of $1.5bn.
Under those terms, PPD will rejoin public markets valued at $9.2bn. The figure is a slight increase on the $9bn valuation from when PPD recapitalized with private investors in 2017.
If PPD achieves its forecast valuation, it will join the upper echelons of the CROs on public markets. IQVIA and LabCorp, the owner of Covance, are worth two to three times as much as PPD’s forecast valuation but both companies provide a far broader range of services than traditional CROs.
Among the more focused CROs, Icon currently leads the way with a market capitalization of $9bn. The Irish CRO is trailed by PRA Health Sciences and Syneos Health, both of which are valued today at around $6.5bn.
The terms of the IPO position PPD to generate net proceeds of close to $1.5bn, although that figure may rise or fall depending on the final per share price agreed with investors.
PPD will use the money to repay debts it took on in 2017 and 2019. Collectively, the two private placements featured close to $1.5bn in unsecured notes that are due to mature in 2022.
Buoyed by the forecast IPO haul, PPD will redeem the principal amounts of the notes, plus accrued and unpaid interest. If PPD raises more than the forecast amount, which is similar to the principals of the notes, it may choose to pay down more of the debt it took on as a private company.