Nordic Capital exits The Binding Site in $2.6bn deal

BY Richard Summerfield

European private equity firm Nordic Capital has agreed to sell The Binding Site Group, a global leader in specialty diagnostics, to Thermo Fisher Scientific Inc., in an all-cash transaction valued at $2.6bn.

The transaction, which is expected to be completed in the first half of 2023, is subject to customary closing conditions, including regulatory approvals. Upon completion, The Binding Site will become part of Thermo Fisher’s specialty diagnostics segment and is expected to be accretive to adjusted earnings per share by $0.07 for the first full year of ownership.

The Binding Site, which is headquartered in Birmingham, UK, has more than 1100 employees globally and is an active and influential contributor to the broader scientific community. The company is an established leader in a fast-growing segment in which patient care has shifted toward early diagnosis and monitoring via regular testing. Its business has been growing approximately 10 percent annually and is on track to deliver more than $220m of revenue in 2022.

“This transaction perfectly aligns with our Mission and is an exciting addition to our existing specialty diagnostic offerings,” said Marc N. Casper, chairman, president and chief executive of Thermo Fisher. “With extensive expertise and a large and dedicated installed base in cancer diagnostics, The Binding Site will further enhance our specialty diagnostics portfolio. The Binding Site is extremely well-respected by researchers and clinicians alike for its pioneering diagnosis and monitoring solutions for multiple myeloma. We also know early diagnosis and well-informed treatment decisions for multiple myeloma can make a significant difference in patient outcomes. We are excited by the opportunity to enable further innovation in this area for the benefit of patients and look forward to welcoming The Binding Site team to Thermo Fisher.”

“This announcement marks the beginning of a new and exciting chapter for The Binding Site and is a testament to our team’s singular commitment to improving patient lives through the development and delivery of innovative solutions,” said Stefan Wolf, chief executive of The Binding Site. “The Binding Site has long been at the forefront of medical diagnostics and by joining the world leader in serving science, we will be even better positioned to accelerate scientific discovery and expand our product offering for the benefit of our colleagues, customers and, most importantly, the patients we serve.”

“We are proud to have partnered with The Binding Site,” said Dr Raj Shah, a partner and head of healthcare at Nordic Capital Advisors, and Jonas Agnblad, a partner at Nordic Capital Advisors and a board member of The Binding Site. “Their cutting-edge technology and innovative specialty diagnostic solutions improve millions of patient lives globally. During Nordic Capital’s ownership the company has experienced strong growth and transformation, achieved by a dedicated focus on R&D investment, commercial focus and global expansion. We are grateful to The Binding Site team, for their dedication and for building strong scientific foundations which support the changing needs of patients and clinicians. This transaction marks the culmination of a very successful partnership, a successful outcome for Nordic Capital’s investors and the start of an exciting next phase for The Binding Site.”

Nordic Capital has been the majority owner of The Binding Site since 2011 when it completed the acquisition together with Five Arrows.

News: Thermo Fisher Scientific to Acquire The Binding Site Group

Cyber security: recession proof?

BY Richard Summerfield

Amid ongoing economic and geopolitical challenges, the cyber security sector remains strong, according to a new report from ICON Corporate Finance.

Thus far, the sector is proving recession-proof and remains a growth area, defying current troubling macroeconomic headwinds. As such, the cyber security sector is leading the way for M&A and fundraising activity in 2022, with deal activity for Q1-Q3 up 60 percent compared to 2020 for M&A and up 22 percent for fundraising.

The report notes that going forward, enterprises must recognise that they must continue investing in cyber defences regardless to protect against an increasingly sophisticated threat landscape, and because of significant geopolitical and economic uncertainty. This, in turn, is acting as a catalyst for M&A and fundraising deal activity.

According to ICON, the first three quarters of 2022 saw 353 cyber security M&A deals, with a total value of $125bn. As a result, the sector is on track to surpass pre-coronavirus (COVID-19) levels. With vendor platform consolidation, largely backed by private equity, being a chief driver behind the sustained deal activity.

Fundraising activity also remained in line with long-term trends, with $15.4bn of venture capital money invested in the sector globally across 572 deals in the first three quarters of the year.

“Enterprises recognise that they must continue hardening their security defences to keep above water in the arms race between good and bad,” said Florian Depner, director of ICON Corporate Finance. “Cybersecurity is mission-critical and companies have no choice but to keep investing given the uplift in malicious activity, and state-backed attacks.

“We also anticipate that Private Equity will continue injecting much-needed growth fuel into later-stage scale-up companies; a trend demonstrated by the BlackRock-backed $250m (£221.7m) investment in Swiss-based storage management and personal backup services provider Acronis.

“These factors, combined with Private Equity backing buy-and-build strategies and vendor platform consolidation, and the fact that the three-year cyber security index for public sector stocks rose 61.5%, while NASDAQ rose just 35.5%, makes cybersecurity players undeniably desirable.”

Going forward, ICON predicts that consolidation will continue at pace as trade and PE acquirers are ready to capitalise on market opportunities.

Report: Cybersecurity Sector Update – Q3 2022

EIG buys Tokyo Gas’ Australian LNG portfolio for $2.15bn

BY Fraser Tennant

Marking the launch of a strategy to build a diversified, global integrated liquified natural gas (LNG) company, MidOcean Energy, a unit of private equity firm EIG, is to buy four Australian LNG projects from Tokyo Gas Co., Ltd in a transaction valued at $2.15bn.

The acquisition will see EIG acquire Tokyo Gas’ interests in Gorgon LNG, Ichthys LNG, Pluto LNG and Queensland Curtis LNG – integrated projects that span Australia’s western and eastern seaboard and are major suppliers of LNG to Asia.

The Tokyo Gas portfolio is expected to generate approximately 1 million tonnes per annum of LNG net to MidOcean, production that is underpinned by long-life reserves and a globally competitive cost structure.

The transaction is also in line with the Tokyo Gas Group’s Management Vision, ‘Compass 2030’, where Tokyo Gas continues to demonstrate leadership in the transition to net-zero CO2 emissions.

“Since 2003, our company has participated in five Australian LNG projects and expanded its business holdings in upstream LNG interests,” said Tokyo Gas in a statement. “Four of those projects, excluding the Darwin LNG project, will be transferred to MidOcean. “Under the Compass Action plan, our company will review its asset portfolio in order to allocate resources to growth areas.”

Tokyo Gas, Japan's biggest city gas supplier, did not disclose the terms of the transaction.

“The launch of MidOcean reflects our deep belief in LNG as a critical enabler of the energy transition and the growing importance of LNG as a geopolitically strategic energy resource,” said Blair Thomas, chairman and chief executive of EIG. “We believe this transaction provides MidOcean with a foundational portfolio of cost-advantaged integrated LNG assets in a low-risk jurisdiction, ideally positioned to supply key customers in Japan, Asia and across the globe for decades to come.”

During its 40-year history, EIG has committed over $41.5bn to the energy sector through over 387 projects or companies in 38 countries on six continents. EIG’s clients include many of the leading pension plans, insurance companies, endowments, foundations and sovereign wealth funds in the US, Asia and Europe.

The transaction is expected to close in the first half of 2023, subject to customary closing conditions, including Australian regulatory approvals.

De la Rey Venter, chief executive of MidOcean, concluded: “We see a number of opportunities to further expand MidOcean’s position in supplying LNG markets around the world and look forward to working with our new partners and customers.”

News: EIG unit to buy Tokyo Gas's stakes in Australian LNG projects for $2.15 billion

ECP agrees $1.41bn Biffa deal

BY Richard Summerfield

Private equity firm Energy Capital Partners (ECP) has agreed to acquire British waste management company Biffa Plc in a deal worth $1.41bn.

Under the terms of the deal, Biffa shareholders will receive 410p per share from ECP-controlled Bears Bidco. Including dividend payments, the offer is 28 percent higher than the FTSE 250 group’s closing price of 325p a share on the day before the June bid was announced, and values Biffa’s equity at about £1.3bn. In June, Biffa’s board said it was “minded to recommend” that shareholders accept the initial 445p offer, however the final deal is worth 7.9 percent less per share than the original offer.

“It is the Biffa Board’s view that this offer represents a compelling opportunity, particularly in a weakening economic environment, for shareholders to realise, in cash and with certainty, the potential for future value creation,” said Ken Lever, chair of Biffa. However, he conceded that the offer was “lower than the proposal previously announced”.

Mr Lever added: “Since IPO in October 2016, the successful pursuit of our growth strategy has seen Biffa expand its leadership position in its I&C collections business and oversee a significant investment programme across UK green economy infrastructure, strengthening its capabilities as one of the leading sustainable waste managers in the UK. ECP is an experienced investor in environmental infrastructure and sustainability assets and offers a supportive environment to accelerate the Group’s further development and growth as a leading enabler of the circular economy.”

“ECP is excited to begin this long-term partnership with Biffa and its extremely talented employees and leadership,” said Andrew Gilbert, partner of ECP. “We intend for Biffa to remain focused on providing the high level of service to which its customers have become accustomed and look forward to supporting Biffa’s strategic initiatives, development, growth and industry leadership.”

ECP is a frequent investor in energy transition, electrification and decarbonisation infrastructure assets that are focussed on sustainability. Founded in 2005, ECP is a global investment firm with more than $26bn in capital commitments from more than 600 limited partners and a portfolio of more than 20 operating equity portfolio companies.

Biffa is one of the UK leaders in sustainable waste management with a significant investment programme across UK green economy infrastructure. The company has a history of private ownership. Biffa was acquired by Severn Trent in 1991 and floated in 2006. Two years later, the company was taken private again by a group of PE investors, before rejoining the London stock market in 2016.

News: UK waste firm Biffa agrees to Energy Capital Partners' $1.41 billion buyout deal

VC slowdown in Greater China lingers, reveals new report

BY Fraser Tennant

Venture capital (VC) activity in Greater China dropped significantly in the first half of 2022, continuing a slowdown since late last year, according to a new report by the Apex Group.

In the ‘Greater China Venture Report H1 2022’, the Apex Group reveals that VCs invested only $28.6bn in the region in H1 – below the Q3 2021 figure – a figure which reflects the many hurdles the region has faced over the past year, including regulatory headwinds, supply chain issues and macroeconomic challenges.

“It has been a challenging period for (VC) in China, with activity in the market slowing significantly in early 2022 as the macroeconomic environment became less favourable for venture investors,” said Debbie Lee, managing director, China at the Apex Group. “Restrictions relating to technology and the coronavirus (COVID-19) pandemic, coupled with ongoing geopolitical risks, have exacerbated the challenges facing many investors.”

Drilling down, the report shows that only 56 mega-rounds of $100m or more were completed in the first six months of 2022, off pace from 2021’s regional record of 261, while exit value totalled just $40.6bn across 64 deals – a significant year-over-year slowdown, especially for initial public offerings (IPOs).

The report also notes that fundraising continued to fall in H1 2022, with the region’s dry powder ebbing to $122.7bn, raising concerns about long-term capital availability, especially if investors outside the region face more hurdles to entering the market.

“The current VC market landscape in China is seeing a slowdown in fundraising activity due to a fundamental change in the market landscape,” said Ms Lee. “In the last decade, the VC community has found opportunities created by the mobile internet increasing efficiency and disrupting traditional business models. Investors are becoming more cautious and need real returns on investment instead of just buying into the digitalisation narrative. Meanwhile, private equity (PE) managers are more inclined to find earlier-stage projects, thus creating more competition for VC investors.”

In another trend noted by the report, there has been a further expansion of the scope and depth of Chinese investment markets for foreign investors in 2022.

“The trend of continuous inflows of foreign capital in 2022 will continue, and we expect to see more international VC managers investing in Chinese businesses under the QFLP scheme,” added Ms Lee. “As a result, international service providers for financial services and talent in the China market will continue to be in demand.”

Report: Greater China Venture Report H1 2022