Nordic Capital’s Agnblad: The Binding Site growth story ‘exceeded expectations’

The Binding Site provides diagnostic products to clinicians and laboratory professionals for the detection, diagnosis and management of blood cancers.

Nordic Capital “did not foresee” how large the return on its investment would be – nor the eventual length of its holding period – when it acquired The Binding Site in 2011, partner and co-head of healthcare, Jonas Agnblad told PE Hub Europe.

Nordic Capital and Five Arrows announced that they had entered into a definitive agreement to sell The Binding Site to Thermo Fisher Scientific in a deal valued at £2.25 billion ($2.6 billion; €2.6 billion) at the end of October. The exit yielded 19x Nordic Capital’s initial investment in The Binding Site, according to sources close to the matter, who added that it made it the firm’s best investment to date.

“Of course, we thought Nordic Capital bought a fantastic business with great potential, but the fact that it would be owned for more than 11 years and have such a fantastic development and return on our investment – that exceeded our initial expectations,” Agnblad said.

Birmingham, England-headquartered The Binding Site provides diagnostic products to clinicians and laboratory professionals for the detection, diagnosis and management of blood cancers, such as multiple myeloma and immune system disorders. The buyer, Thermo Fisher Scientific, is a supplier of scientific equipment, reagents and consumables, and software services headquartered in Waltham, Massachusetts.

Nordic Capital opted to extend the holding period of The Binding Site in 2018 with the use of a continuation fund, as the firm saw further opportunities to drive sales earnings and value. “Continuation vehicles are a great way for active owners like Nordic Capital to continue to drive value for a longer period,” Agnblad said. “It’s really a win-win.”

Growth for The Binding Site was “not driven by M&A in any way, shape or form”, according to Agnblad. Nordic Capital invested “significantly” in the business during the ownership. Areas such as organisational and operational footprint were especially targeted and The Binding Site more than doubled its number of employees.

Geographic expansion was also part of the value creation plan. Nordic Capital aided The Binding Site to establish a direct presence in a number of markets, such as South America. “By establishing direct presence you’re in charge of your own destiny, if you will,” Agnblad explained. “You don’t need to share a part of sales or the upside of the value with a partner.”

Investment in innovation and technology was another important factor in growing the firm, said Agnblad. Nordic Capital “drove awareness and adoption” of the tests the company offers by establishing scientific proof and support, and introduced a new diagnostic platform together with several additional tests. “We have transformed it from being a founder-led business to a global, fast-growing leader in cancer and specialty diagnostics,” Agnblad added.

Healthy market

Unsurprisingly, following the success of the exit, Nordic Capital is still keen on the healthcare sector. From the firm’s point of view, the sector has not been severely impacted by the poor macro environment. “The demand is driven by other factors, with limited consumer exposure, apart from specific segments,” Agnblad said. “As opposed to tech companies, which have seen a dramatic decrease in their valuation multiples, healthcare has proven pretty resilient.”

While Nordic Capital noted a slowdown in M&A activity across industries, partly due to a mismatch between public valuations and the expectations of sellers, the firm is optimistic about the future. “We’re seeing signs of increased deal activity, and that buyers and sellers are starting to meet,” Agnblad said. “If I look ahead, I do expect more transactions generally, going into next year. In particular in healthcare, as it’s a sector in which we have seen less of an impact from the slower macro environment.”

Nordic Capital is a private equity firm headquartered in Stockholm. It invests across the healthcare, technology and financial services sectors. In late October, the firm completed one of the largest fundraises in Europe this year, closing Nordic Capital Fund XI at €9 billion, as reported by affiliate site Private Equity International.