Great Point Partners is looking to sell Softbox, according to four people familiar with the firm’s plans. Softbox, a provider of temperature controlled packaging for pharmaceutical companies, is helping tackle the supply chain needs of the covid-19 crisis.
Robert W. Baird is providing financial advice to the sellers, the sources said. A process recently kicked off for the Long Crendon, UK-headquartered company, with indications of interest due in September, one person said.
The company is projecting around £45 million (~$62 million) in adjusted EBITDA for the full year 2021, with its growth accelerating in the wake of the global pandemic, sources said. Trailing 12 month EBITDA was pegged at around £33 million earlier this year.
Softbox has developed a range of vaccine parcel shippers and pallet shipping systems capable of safely and securely transporting temperature-sensitive vaccines – ultimately supporting their global distribution, its website states.
For sponsors evaluating the business, sources said, determining what forward-looking normalized EBITDA will look like will be a key question. That said, the supply chain demands of vaccines are not poised to go away.
GPP managing director and co-founder Jeffrey Jay declined to comment on Softbox, but commented on the broader covid environment in an email to PE Hub: “With the EU, US, Israel and China all ordering covid booster vaccines for 2022 (for a minimum, the elderly and immune compromised as the vaccines are less effective in these groups), Covid is not a “bump” but a continuing, recurring viral epidemic that will take years to get under control.”
One key distinction about Softbox, which has manufacturing sites throughout EMEA, Americas, India and Asia Pacific, is that it exclusively designs and produces “passive” temperature control packaging systems for pharmaceutical companies and specialist logistics providers.
A passive cold-chain system, simply put, is an insulated box or container typically using water/ice or dry ice to extend the shelf life of a product – not unlike the styrofoam coolers used to deliver services like Blue Apron to consumers, although such systems like Softbox’s last significantly longer, sources said.
Active containers, on the other hand, can control and maintain a specific temperature for as long as required using electric cooling or heating systems, with the ability to recharge as needed.
Although active cold-chain systems provide the most safety in the case something goes wrong during transport, the market for passive containers is big and growing, sources said: “If you’re shipping from London to Newark, where flights are predictable, there are a lot of use cases where the passive container is perfectly appropriate. The passive technology is pretty long.”
With covid-19, the importance of supply chain controls has come into real focus. At the same time, many drugs that might not have been thought about in the past – in terms of monitoring temperature to maintain quality – are now gaining attention, ultimately benefiting the passive market, sources said.
Outside of Softbox, there are two other cold-chain logistics companies of scale serving the global pharma market.
Most relevant to Softbox is CSafe, which, jointly owned by Thomas H. Lee Partners and Frazier Healthcare Partners, manufactures both active and passive containers. Frazier last year bought a 50 percent stake in the Dayton, Ohio-based company from THL, whose investment dates to 2016.
Elsewhere, Envirotainer, backed by Cinven and Novo Holdings, is the global leader in active cold-chain technologies for air transport of pharmaceuticals. AAC Capital sold Envirotainer to Cinven in mid-2018 in a deal reportedly valuing the Swedish company at more than €1 billion ($1.1 billion). Cinven subsequently sold an almost 25 percent stake to Novo.
On the passive side, other participants include packaging companies like Sonoco, which provides temperature controlled packaging through its ThermoSafe unit.
Great Point Partners, a Greenwich, Connecticut-based private equity firm investing exclusively in healthcare companies, looks poised to generate a handsome return on Softbox.
The firm, which completed a growth recapitalization of Softbox Systems in July 2014, typically invests in businesses generating $2 million to $12 million of EBITDA, writing equity checks in the $7 million to $50 million range.
GPP explored the cold-chain distribution space for two years prior to its investment, according to its website. As a US-based investor, GPP said it “was particularly well positioned to assist in Softbox’s geographic expansion into the US market, where Softbox’s sales were relatively modest despite the fact that the region constituted 50% of total global cold chain services sales.” The firm continues to support Softbox’s US expansion, according to its website.
The company’s growth has also been fueled in part via M&A. In 2017, GPP arranged the debt financing and structured the strategic acquisitions of Tempack, a Barcelona-based competitor, and TP3, an English company with a line of thermal blankets.
Baird and the company did not immediately return PE Hub‘s requests for comment.