Private equity firm to pay £120m to the founder of a life science company.

Private equity firm to pay £120m to the founder of a life science company.

The founder of a British life sciences company is set to get £120 million after his company became the latest to be taken private after trading on the London Stock Exchange. Ergomed was founded in 1997 by 64-year-old Croatian neurologist Miroslav Reljanovi, who now stands to cash in after receiving a purchase bid from private equity firm Permira. The company is currently valued at £703 million.

As the latest indication that companies listed on the London Stock Exchange are leaving the capital’s public markets in quest of higher valuations elsewhere, the offer of £13.51 per share marks a 28.3% premium over Guildford-based Ergomed’s share price as of Friday’s market closing.

The purchase comes after veterinary pharmaceuticals company Dechra agreed to be taken private by investment group EQT for £4.5 billion, or a premium of nearly 40% over the company’s previous share price.
Ergomed stockholders will be able to cash in at a very favorable price, according to Reljanovi.

We will be able to build on the groundwork we have laid thanks to the private ownership of funds advised by Permira… The ability to tap into their operational know-how, international connections, and financial resources is another perk.

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”Yet another firm is set for an exodus from the UK stock market to seek fresh pastures in the world of private equity,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“Ergomed is clearly hoping the financial clout of Permira will enable it to access the funding streams necessary to achieve that expansion. “The reluctance of investors towards the UK market is likely to have been part of the calculation. Before this offer was made, the stock had been trading for over a third less than its all-time high, reached in November 2021.
Ergomed, headquartered in Surrey, provides clinical trial and research services to the pharmaceutical sector. After being valued at £46 million when it first went public on the AIM exchange in 2014, it has since acquired a number of companies in other countries, most recently the $25 million research firm MedSource in Texas in 2020.

The company focuses on finding treatments for rare diseases, for which there is a dearth of trial participants. In the first half of 2023, the company recorded sales of £76.7 million, up 10% year over year, and an order book of £310 million, up 9%.
Private equity firm Permira, based in London and was part of asset management behemoth Schroders until the late 1990s, manages more than £60 billion in assets for an undisclosed Guernsey-based parent company.

The company has invested in several additional life sciences companies, including as Althea, Cambrex, and Creganna, and employs more than 470 people in the healthcare and technology industries.

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