Par Pharma sale to produce seven-fold return for TPG in less than 3 years

TPG Capital, which is out fundraising, stands to make about 7.5x its money with the sale of Par Pharmaceutical Holdings Inc.

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, New Jersey-based Par Pharma is a specialty generic and branded pharmaceutical company. The company reported 2014 revenue rose 18 percent to $1.3 billion. Adjusted EBITDA was $433.8 million, a May regulatory filing said.

TPG-led an investor group in the acquisition of Par Pharma in September 2012 in a deal valued at $1.9 billion. The consortium invested $738.8 million equity in the deal, according to SEC filings. It’s not clear who co-invested alongside TPG in the deal.

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

Last year, Par Pharma acquired JHP Pharmaceuticals for $487 million. The TPG-led group put in another $100 million 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 roughly $838.8 million and stands to get back $6.29 billion ($5.8 billion plus the $494.3 million distribution).

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.

Such a strong return with 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.

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