Baring Asia, Onex to list Clarivate through reverse merger
Baring Private Equity Asia will list Clarivate Analytics – an education business it acquired from Thomson Reuters in conjunction with Onex Corporation – through a merger with a special purpose investment vehicle that trades in New York.
The transaction implies an enterprise valuation of $4.2 billion. Clarivate was bought for $3.5 billion in July 2016, including $1.6 billion in equity. Baring contributed $400 million, with the remaining $1.2 billion coming from Onex Partners IV and several LP co-investors. Onex, a Canada-listed private equity firm, manages the fund and served as one of the co-investors. The equity portion is now valued at $2.18 billion, according to a filing.
Onex, Baring and Clarivate management are retaining 100% of their equity, which converts to 73.8% interest in Churchill Capital Corp, the special purpose investment vehicle. Onex will remain the majority shareholder. The founders of Churchill will only vest their shares if the price exceeds $15.25 by 2022 or $17.50 by 2024. Most of the proceeds will be used for working capital purposes and to pay down Clarivate’s $1.3 billion in net debt.
Churchill is a blank check company formed to pursue opportunities in the information services segment of the technology services and software industry. Led by Jerre Stead, formerly chairman and CEO of IHS Markit, it raised $690 million in cash through an IPO last September. Stead will become executive chairman of Clarivate, working alongside the existing management team, including CEO Jay Nadler.
Clarivate provides subscription-based data, insights and analytics services to universities, corporations, and legal industry clients. Its brands include Web of Science, Cortellis, Derwent Innovation, Derwent World Patents Index, CompuMark, and MarkMonitor. Since the carve-out from Thomson Reuters – the separation will be formally completed this year – new management has been recruited and steps have been taken to reenergize products and commercial capabilities. The company generated $936 million in revenue in 2017 and EBITDA of $303 million.
“The combination of Clarivate and Churchill will bring together some of the most experienced professionals in the information services industry. We’re excited to be working with Jerre whose experience and network will allow the company to further accelerate its expansion throughout Asia, which is already the fastest growing market for Clarivate’s data and related services,” said Nicholas Macksey, a managing director at Baring.
Founded in 1997, Baring has more than $17 billion in committed capital across its private equity, real estate, and credit platforms. The firm is currently raising its seventh pan-regional fund, which has a hard cap of $6.5 billion.
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