Genstar Is Said to Explore Possible $5 Billion Advarra Sale

(Bloomberg) -- Private equity firm Genstar Capital is exploring a potential sale of Advarra Inc. that could value the drug-research services firm at $5 billion or more, according to people with knowledge of the matter. 

Genstar is also considering taking Advarra public, said the people, who asked not to be identified because the matter isn’t public. The company, which is expected to draw interest from other private equity firms, generates about $200 million a year in earnings before interest, taxes, depreciation and amortization, the people said.

Advarra could fetch at least $5 billion in a sale based on its earnings and comparisons with similar companies, the people said. A final decision hasn’t been made and Genstar’s plans for Advarra could change, they added.

Representatives for Genstar and Advarra declined to comment.

Advarra helps get drugs to market by reviewing clinical research to ensure trials are safe for participants and comply with regulatory requirements. The company says it supported all of the coronavirus vaccine clinical trials under the Trump administration’s Operation Warp Speed, which used government resources to fast-track vaccine development.

The company is the biggest institutional review board, or IRB, in the U.S. and largely operates in a duopoly with Leonard Green-backed WCG. IRBs are designated under U.S. Food and Drug Administration rules to review, approve and require changes to how trials are run.

A sale would add to a boom in activity involving companies that support drug research, as money pours into the development of new treatments and vaccines.

Thermo Fisher Scientific Inc. agreed in April to buy PPD Inc., a provider of clinical and research services, for $17.4 billion. In July, buyout firm EQT AB and Goldman Sachs Group Inc.’s investment arm announced an $8.5 billion deal to buy Parexel International Corp. Certara Inc. said in August it was buying software company Pinnacle 21 for $310 million. 

Genstar acquired a majority stake in Columbia, Maryland-based Advarra from Linden Capital Partners in 2019. PE Hub reported at the time that deal was valued at about $1.3 billion. 

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