Archimed makes public-to-private play

We kick things off today with the latest take-private offer, this time involving a play by Archimed for a UK-listed healthcare tech company.

Next, we get the dealmaking outlook for the second half of the year from Schroders Capital’s chief investment officer Nils Rode, before we finish with a look at a cybersecurity add-on involving a company backed by EQT and 83North.

Health take-private

We’ve got another take-private of a UK company to report, as the board of Instem, a workflow, data and IT product provider for the drug development sector, announced it has agreed terms on a recommended cash offer with healthcare private equity firm Archimed.

The offer is for £8.33 per share, which values the total issued capital of Instem at around £203 million ($257 million; €236 million). That’s a premium of 41 percent to yesterday’s closing price, 35 percent to the three month average up to yesterday and 34 percent to the six month average.

Instem’s share price jumped to £8.29 on the news.

The enterprise value of the offer is £198 million which gives an implied multiple of around 18.3 times, based on Instem’s EBITDA for the 12 months to 31 December of £10.9 million. Instem expects revenue for the first half of 2023 to be around £29.7 million, up from £27 million in the first half of last year, with recurring software revenue up by 27 percent.

Instem’s European headquarters are in Staffordshire in the UK, while its North American headquarters are in Philadelphia. It also has other offices in the UK and US and a presence in China, India, Japan, France, Romania and Switzerland. It listed on the AIM sub-market of the London Stock Exchange in 2010.

Archimed believes it can capitalise on operating leverage by moving Instem’s Study Management product from an on-premise delivery model to a SaaS model, leverage its network to boost organic growth in Instem’s In Silico & Translational Science and Clinical Trial Analytics business segments and fund M&A opportunities.

Latham & Watkins is legal adviser to Archimed while Squire Patton Boggs is legal adviser to Instem.

Rothschild & Co and Singer Capital Markets Advisory are financial advisers to Instem while Moelis & Company is acting for Archimed.

GP-led

The attraction of the healthcare sector was also something touched on in the latest of our interviews with senior private equity figures about the outlook for the second half of the year.

Nils Rode, chief investment officer at Schroders Capital, said that his firm was “particularly drawn to opportunities focusing on healthcare”. He added: “Healthcare investments are generally less cyclical and can benefit from long-term structural trends, like the technological revolution and ageing populations. Furthermore, many parts of the healthcare market are fragmented, offering attractive buy-and-build opportunities.”

Here’s another snippet from the interview.

What are the exit opportunities for private equity-backed companies in 2023?

With IPO markets remaining quiet and M&A exits expected to decline, we expect the importance of GP-led transactions to increase further. Additionally, we expect large buyout funds to continue to be active acquirers of portfolio companies from other private equity funds, thereby providing an important exit route to those funds and facilitating opportunities for value creation.

You can read the whole article here.

Cyber strengthening

EQT- and 83North-backed CYE has acquired Baseline, a vulnerability analysis platform by Cyberillium.

Cyberillium is a security research firm providing product security research and adversary simulation services. The company is based in Tel Aviv.

CYE will incorporate Baseline’s capabilities into its Hyver platform, enabling automated attack route creation and prioritisation based on Baseline’s context-aware algorithms, according to a release.

EQT and 83North invested in CYE in 2021. CYE is a cybersecurity company based in Tel Aviv, with offices in New York and London.