Buyout giant EQT has agreed to buy into €2.2bn-managing European life science venture capital firm LSP for €450m to strengthen its position in the healthcare sector.
A potential earn-out payment of €25m will also be made if certain short-term fundraising targets are met, the firm said.
LSP is expected to generate €37m in revenues and €24m in EBITDA this year, and the deal is expected to equate a mid-teens EBITDA multiple on a run-rate basis at completion. EQT is entitled to 20% of the right to carried interest in select LSP funds and 35% of the carried interest of future funds.
Headquartered in Amsterdam, LSP has a team of 34 across its offices in Amsterdam, Munich, and Boston. The VC firm has made over 150 life science investments in the past two decades. The entire LSP team will join EQT, the firm said.
Michael Bauer, partner and co-head of EQT’s global healthcare sector team, said, “We are truly excited about the opportunity to join forces with LSP and form EQT Life Sciences. The EQT and LSP teams have complementary skill sets, and the combination will allow us to support healthcare companies and their management teams in a unique way.
“The life science industry is going through a phase of unprecedented innovation and, through the partnership with LSP, EQT will be able to participate in this growth opportunity and open up doors for attractive new investments in the space.”
René Kuijten, managing partner at LSP, and incoming Partner and Head of EQT Life Sciences, said, “Europe has many attractive life sciences companies. Together with EQT, one of the largest European private equity firms with more than EUR 70 billion under management, LSP can select, develop, and finance these opportunities even better than before.
“Given the strong cultural fit and the complementarity between our organisations, we are convinced that joining forces is a win-win for our investors, our portfolio companies, our LSP colleagues, and the broader European life sciences ecosystem.”
Altassets reported in January that LSP was eyeing up to €150m for a new fund targeting the fight against neurodegenerative diseases.
Last year LSP closed what is believed to be Europe’s largest venture capital fund focused on the life sciences sector, on €600m. The fund manager was initially seeking $450m for LSP 6, but smashed that target after securing commitments from LPs such as Bristol Myers Squibb and Otsuka Pharmaceutical.
EQT soared to a €15.6bn final close for its ninth flagship fundraise in April, beating even its hard cap after successfully navigating the Covid-affected capital raising market.
It said Fund IX would primarily target opportunities in Europe and the US, focusing on healthcare, TMT and services and select investments in industrial technology.
In recent healthcare deals, the firm agreed a $9.6bn sale of vaccine DNA and mRNA supplier Aldevron to Danaher Corpin June, just two years after buying into the business.
It was reported in March that EQT had entered exclusive talks to buy French pathology lab business Cerba HealthCare from Partners Group and PSP Investments, in a deal reported to value the company at about €4.5bn.
The deal comes three years after Partners Group and PSP picked up Cerba from PAI Partners, with that deal believed to give the company a roughly €1.8bn valuation.
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