Avantor marks home run investment for New Mountain amid $3.8 bln public debut

  • Roughly $2.5 bln in dividend pymts made to New Mountain investors prior to IPO
  • New York firm’s investment dates to 2010, via purchase of Mallinckrodt Baker, discontinued operation of Covidien
  • Avantor’s enterprise value has grown to $14 bln-plus, from $280 mln

New Mountain Capital’s investment in Avantor has so far produced a gross multiple of invested capital north of 7x, after the life-sciences-tools company went public in the largest healthcare IPO in history, according to people with knowledge of the situation.

Avantor raised $3.8 billion in its trading debut on May 17, eclipsing hospital operator HCA’s $3.79 billion IPO in March 2011.

Under the New York private equity firm’s nearly decade-long ownership, the Radnor, Pennsylvania, company’s enterprise value has grown to exceed $14 billion, based on its IPO price, from $280 million in 2010, New Mountain said in a news release.

New Mountain’s position in Avantor is valued at more than $1.5 billion based on the IPO price, the release said. That value increases to about $4 billion when accounting for the approximately $2.5 billion of dividends distributed to investors before the IPO, the people added.

In its public debut, Avantor sold 207 million shares, in addition to $900 million of preferred convertible preferred stock. New Mountain did not sell any shares.

New Mountain’s investment in Avantor dates to August 2010, having formed the initial platform by acquiring Mallinckrodt Baker, then the chemicals unit and a discontinued operation of Covidien.

In the period since, Avantor has been transformed through aggressive M&A — including seven material acquisitions — as well as organic efforts, including global expansion beyond the U.S. and installation of a new C-suite.

Led by CEO Michael Stubblefield, Avantor employs 12,000, as one of the largest global players in the life-sciences-tools space after industry giant Thermo Fisher. The company operates in more than 30 countries, offering mission-critical products and services to the life sciences and advanced technology industries.

New Mountain’s initial investment in Avantor totaled some $500 million, accounting for its 2016 acquisition of NuSil. Avantor’s predecessor and Nusil were initially separate investments, having merged in 2016 to create the combined company called Avantor.

In other notable M&A, Avantor in 2017 acquired VWR Corp, a provider of lab products and services, in a deal valued at $6.5 billion.

Avantor under New Mountain’s backing saw revenue grow to $5.9 billion in 2018 from $414 million in 2009, a 34 percent compounded annual growth rate, New Mountain said.

The company’s Ebitda has increased to more than $1 billion from $50 million at the time of New Mountain’s initial investment, the people added.

Goldman Sachs and JP Morgan Chase were lead underwriters of the offering.

A New Mountain spokesperson declined comment.

Action Item: Check out New Mountain Capital’s latest Form ADV: https://bit.ly/2uWS608