Generic drugs generate big return for TPG

On Monday, Endo International plc said it would buy Par Pharma, a generic drug maker, for $5.8 billion. Including debt, the deal is valued at about $8 billion.

Woodcliff Lake, N.J.-based Par Pharma makes generic and branded pharmaceuticals. It reported 2014 revenue of $1.3 billion and adjusted EBITDA of $433.8 million, according to a May regulatory filing.

TPG led an investor group in the acquisition of Par Pharma in September 2012 in a deal valued at $1.9 billion. The names of the other investors were undisclosed. The consortium invested $738.8 million equity in the deal, according to SEC filings

TPG’s investment in Par came from its sixth buyout pool, which raised $19.8 billion in 2008. TPG Partners VI LP generated an 11 percent net IRR and a 1.4x investment multiple as of Sept. 30, according to the California Public Employees’ Retirement System.

Last year, Par Pharma acquired JHP Pharmaceuticals for $487 million. At that time the TPG-led group put in another $100 million of equity, SEC filings said.

Par Pharma earlier this year paid out a $494.3 million dividend to its shareholders, regulatory filings said. The TPG consortium, which owns 99 percent of the company, got most of it.

The generic drug maker also filed to go public earlier this year. In all, the TPG group invested about $838.8 million and stands to get back $6.29 billion ($5.8 billion plus the $494.3 million dividend).

The sale of Par Pharma comes at a critical time for TPG. The buyout shop is fundraising for its seventh global private equity fund. TPG Partners VII is seeking $10 billion. It collected $6.5 billion in March in a first close, Buyouts reported.

A strong return on Par Pharma will likely help TPG in its fundraising efforts, a placement agent said. “For LPs that were still on the fence about re-upping, this may push them over,” the source said.

Executives for TPG declined comment. Par Pharma could not immediately be reached for comment.