Open for biz: TPG, Blackstone make big bets amid crisis

Despite crisis, firms are still making big deals.

It’s Thursday.

Work. Zoom. Exercise. Cook. … repeat. We’re creeping up on four weeks in isolation, everybody. Have you found any unusual ways to spend your free time when you’re not busy getting educated on corona-related impacts on your portfolios? Or, have you been sucked into the strange universe of Joe Exotic in the “Tiger King” documentary while you puzzle for hours? Guilty.

Giving Back: We’ve been busy collecting intell around firms that are doing good in the wake of the pandemic. To my knowledge, the only healthcare-exclusive or Chicago-based fund that has stepped in with a philanthropic donation is Linden Capital Partners. The PE firm said it gave $100,000 to the Illinois Covid-19 Response Fund to help those in need.

If your firm is giving in any way, or if one of your portfolio companies is developing tests or vaccines to fight the virus curb, I’d love to know. Reach me at springle@buyoutsinsider.com.

Breaking the M&A silence
Sponsors are pulling out their toolkits, proving it’s still possible to write large checks for prized assets in the wake of the downturn.

This Just in: TPG signed an agreement to acquire LifeStance Health, underwriting the deal in all equity with the ability to commit debt financing later, according to sources familiar with the situation. The deal assigns the behavioral health company an enterprise value of $1.2 billion and leaves existing investors Summit Partners and SilverSmith Capital with minority stakes, I’m told.

Check out my full story for more detail on the transaction.
TPG isn’t the only bulge bracket shop showing conviction in the current environment. In other news this week,

Blackstone got creative with a multi-pronged bet of up to $2 billion for Alnylam Pharmaceuticals, representing one of biotech’s largest-ever private financings.

Many parts of the firm came together to pull off the transaction, with some 30 folks involved firm-wide, Brad Marshall, a senior managing director with GSO Capital Partners, Blackstone’s credit platform, said.

Blackstone Life Sciences initially met Alnylam based on its desire to pursue either a debt-backed royalty deal supported by inclisiran, a drug under development for the treatment of high cholesterol, or secure full monetization of that royalty stream, Marshall said.

As a lender, GSO didn’t think a single-drug asset was prudent and initially passed on the drug-backed deal, but when Blackstone Life Sciences decided to pursue a royalty monetization, the teams went back to the drawing board, Marshall said.

GSO looked at the $13 billion-plus market cap company, more broadly, and said, “we could get a lot of comfort around a more diversified collateral package which included the commercialized drugs,” Marshall said, referring to Onpattro and Givlaari. “So that’s what we did.”

Months after deal talks initiated around a single drug under development, the transaction had evolved into four key components: the inclisiran royalty monetization, corporate debt, the purchase of Alnylam equity and the funding for certain R&D activities.

“From a capital standpoint, obviously when we do our work on a company and we like that opportunity, we want it to be as big as possible,” Marshall told me.

The investor also spoke to Alnylam’s ability to weather the storm amid the crisis. If you think about a business like this, Marshall said, “your cash flows are so far in the future, meaning it’s three, four, five, six years before these drugs get commercialized. What happens in one or two quarters is somewhat inconsequential to your overall return – certainly as it relates to this one drug called inclisiran.”

For more behind the scenes of the transaction, stay tuned for my full story.

Top Scoops
On the move: Oak Hill Partners is building out its healthcare franchise, hiring Micah Meisel as a partner. The investor was previously at InTandem Capital Partners and J.H. Whitney Capital. Read more.

Seven Hills Capital continued to consolidate the complex rehab technology market through Reliable Medical Supply, clinching a deal for A&A Medical Supply as it continues to hunt for acquisitions, the firm told me.

A number of FTV Capital-backed enterprise technology companies are addressing unexpected needs of healthcare workers, a senior member of the firm said. ID.me, for instance, is teaming up with Slack to create a secure workspace for hospitals. Check it out.

That’s it for me today. As always, reach me at springle@buyoutsinsider.com with your comments, tips or just to say hello.