Singapore, UAE government funds’ new investments put PPD at $9B

At this week’s HX: The Hotel Experience event in New York City, a panel discussion between members of the International Society of Hospitality Consultants talked development.
PPD welcomes two new government-backed investors, valuing the company at more than $9 billion.

A subsidiary of the Abu Dhabi Investment Authority (ADIA) and an affiliate of Singapore’s GIC have bought a minority stake in PPD, valuing the CRO giant at more than $9 billion.

PPD’s current owners, private equity firms Hellman & Friedman and the Carlyle Group, reached definitive agreements to recapitalize PPD through transactions with the two new investors, while maintaining a majority control of the CRO.

Reuters previously reported that Carlyle owns 60% of PPD and Hellman & Friedman owns the remaining 40%. After this stake transaction, Hellman & Friedman will become the majority holder, while Carlyle will own a substantial minority share.

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The company’s board will also change slightly, a media aide with PPD told FierceCRO. Hellman & Friedman’s and Carlyle’s seats will rebalance to reflect their new ownership, and new investors ADIA and GIC will each get one seat.

“PPD expects to raise about $550 million through the issuance of new senior unsecured holdco notes,” a release put forward by the company stated. But it kept mum about the exact amount each participant will invest, revealing only that all four of them, including the two current owners, are contributing.

The deal is subject to regulatory approvals in the U.S. and is expected to close in the second quarter of 2017. 

ADIA is a public investment institution established by the government of the Emirate of Abu Dhabi in United Arab Emirates. GIC, though an invest firm, is also Singapore’s sovereign wealth fund set up by the government to manage the country’s foreign reserves. Both of them are already longtime investors in Carlyle and Hellman & Friedman, but will also become direct investors in PPD once the deal closes.

“After evaluating all our options, the board determined a transaction led by our existing owners was in the best interest of the company and all its stakeholders,” said David Simmons, chairman and CEO of PPD, in a release.

The two equity firms took PPD private in December 2011 for $3.9 billion. The CRO has since grown exponentially, with revenue up more than 70%, the company said. Now, with these new investments, the company is valued at $9.05 billion. A previous report by The Wall Street Journal put the company’s expected revenues in 2017 at $2.8 billion and earnings at $700 million.

Speculation that PPD would be sold or go public has buzzed since 2015. In February, Reuters named LabCorp—which acquired CRO giant Covance for $6 billion in 2015—as the potential buyer.  

The company employs more than 19,000 people worldwide. It has two locations in Singapore—a lab and a development office—but is not present in UAE. The company did not respond to questions about whether the addition of two new government-backed funds will affect the CRO’s operation in those two countries.