TPG Capital buys stake in iNova Pharmaceuticals, valuing business at $2bn-plus

TPG Capital is understood to be in the box seat to buy iNova Pharmaceuticals.

Private equity heavyweight TPG Capital’s next move after buying a controlling stake in iNova Pharmaceuticals for a price that values the business slightly more than $2bn is anticipated to be a tilt at rival business Mundipharma.

Final bids were due on Friday for iNova and sources said on Monday night that a deal was close.

It was agreed on Tuesday, with TPG buyng a controlling stake, while current co-owner, Pacific Equity Partners, will remain an investor.

As earlier reported by DataRoom, a private equity firm was always expected to be the most likely buyer.

This was because the German pharmacy company Mundipharma is thought to be considering asset sales after being fined for misleading advertising of opioids in the United States.

Strong earnings upside exists from bringing iNova together with Mundipharma operations - a move straight out of the playbook of a global private equity fund.

PEP and Carlyle bought the iNova business from US-based Valeant in 2017 for $US930m.

But sources say that Carlyle is not keen to embark on a Mundiphama deal in the future, while PEP has an appetite, as does TPG Capital.

TPG fought off competition from Bain Capital and Blackstone to buy iNova.

The partial sale has been agreed in a tough market where funding for private equity transactions in the United States at attractive rates has largely dried up against the backdrop of rising inflation.

With partial sales more broadly, they can be a way that a vendor still achieves a deal at their valuation expectations without having to take a lower price for the entire company.

Last year, TPG Capital offloaded just part of its pet business Greencross after sources suggest

that suitors were unprepeared to meet its lofty price expectations for the company as a whole.

Loscam last week paused the sale process for its Australia and New Zealand bidders when suitors were understood to have shied away from what were rich price hopes from its Chinese owners, thought to be as high as $2bn.

Jefferies Australia has been working on the iNova sale, while Credit Suisse has been offering funding assistance.

iNova is forecast to generate about $150m in annual earnings before interest, tax, depreciation and amortisation.

The company markets a diversified portfolio of prescription and over-the-counter products in areas such as weight management, pain management, cardiology and cough and cold treatments.

Its key brands include Difflam sore throat lozenges, Andolex throat spray and Nyal cough, cold and flu medicines.