Archer, Ironbridge achieve iNova exit

Archer and Ironbridge sold iNova to Ontario-based Valeant Pharmaceuticals for A$700 million ($690 million). Valeant will pay A$625 million up front and a further A$75 million based on the success of the company's pipeline activities, product registrations and overall revenue. The total consideration reportedly translates into 2.5-3x return for the private equity firms.

iNova's delay has been attributed to asset-related issues as well as weak capital markets. This ultimately led Archer and Ironbridge, which bought the firm for A$450 million from 3M in 2006, to halt the sales process last year.

However, iNova persevered. Unlike Australian private equity-backed peers that have collapsed under fiscal pressure, the firm doesn't represent a pure retail play. It is a market leader, best known for its therapeutic weight management brands like Duromine and its cold-and-cough drugs Difflam and Duro Tuss. The company is expected to report sales of A$200 million for 2011, and John Russel, a partner at Ironbridge, said that annual earnings have risen 60% since the initial investment. iNova has an operating margin of 40%.

"We are delighted with the strong earnings growth iNova has achieved during our ownership," Russell said in a statement. "We have invested heavily in new products and in sales and marketing. The 60% increase in annual earnings since our initial investment is a credit to the iNova team."

This momentum prompted Archer and Ironbridge to relaunch the sale process in September, targeting A$700-850 million. An IPO was also under consideration but in the current market environment, it didn't appear to be a realistic prospect. The only significant listing in Australia this year was by Collins Foods, formerly owned by Pacific Equity Partners, which raised A$201.8 million through an IPO in July. As of Monday, Collins shares were trading 50% below the offer price.

In this environment, trade sales have become private equity's lifeblood. Archer has two significant exits to its name in recent months, teaming up with HarbourVest Partners to sell software company MYOB to Bain Capital and offloading sporting goods chain Rebel Group to Super Retail Group.

Other notable transactions include Pacific Equity Partners and Unitas Capital's sale of Independent Liquor to Asahi Group for NZ$1.5 billion ($1.25 billion) and CHAMP Private Equity's exit from Manassen Foods to China's Bright Food Group, which valued the company at more than A$500 million.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Australasia
• Healthcare
• Ironbridge Capital
• Archer Capital
• Exit
• Trade sale
• healthcare