ArchiMed hits 300x return for debut fund with Polyplus exit

Healthcare specialist ArchiMed has made a roughly 300x return for its debut private equity vehicle on its full exit of Polyplus, a developer of technology used in gene and cell therapy.

ArchiMed and Warburg Pincus have agreed to sell the France-headquartered business to life science group Sartorius for approximately €‎2.4 billion, according to a statement.

ArchiMed’s €146 million 2014-vintage MED I acquired an approximately 90 percent stake in Polyplus in 2016, Denis Ribon, chairman and managing partner of ArchiMed, told Private Equity International. The firm invested less than €10 million, with management retaining minority ownership. At that time, Polyplus’s valuation was below €10 million, Ribon added.

In 2020, ArchiMed sold approximately half of its majority stake to Warburg Pincus, with the pair together owning around 95 percent of Polyplus following the deal. The transaction was based on a €550 million value, generating a return of more than 70x for Med I investors, Ribon said.

As part of that transaction, ArchiMed set up a continuation fund to house the majority of its remaining stake, though MED I remained invested in the asset.

The continuation vehicle, PolyMED, was €242 million in size and included uncalled commitment for possible add-on acquisitions, Ribon said. The price was set by a full sale process managed by Jefferies that saw Warburg Pincus emerge as the buyer. The vehicle received backing from existing Med I LPs and other existing ArchiMed investors, and was 2.5x oversubscribed.

The sale of the asset to Sartorius marks a roughly 300x multiple on invested capital for Med I’s remaining stake in Polyplus, and a 4.5-5x return for its continuation vehicle, Ribon said.

This exit brings Med I to a 5x distributed to paid-in multiple, and Ribon expects the vehicle to reach a 6-7x DPI. Without the Polypus transaction, Med I would be close to a 3x DPI – a performance similar to the €315 million 2017-vintage MED II and €1 billion mid-market vehicle, MED Platform I.

Half of ArchiMed’s team is made up of people with non-financial backgrounds, including scientific, medical or operational, Ribon said. ArchiMed directly sourced the Polyplus transaction through its life sciences tools and biologic services team.

Polyplus is “really deep in science despite being a profitable space, so if you don’t have this intimate sector-scientific knowledge, you’re really going to struggle to make this kind of deal, especially when it’s small”, Ribon told PEI.

Polyplus hired a new CEO from ArchiMed’s operating partners team after a global search with Warburg Pincus, Ribon added. The firm refocused the business from Europe to the US and readjusted its customer focus from academia to biopharma.

Archimed launched its MED Platform II in January 2022 and had raised in excess of €2 billion as of October, according to a statement. It has a re-up rate of almost 100 percent.