Genstar scores 8x on sale of ERT to Nordic Capital

Genstar Capital will book a roughly 8x return on the sale of ERT to Nordic Capital for a purchase price of nearly $1.8 billion, according to a source familiar with the firm

The San Francisco-based firm is selling ERT, a cloud-based data provider for clinical drug trials, after taking it private in 2012 for $400 million. The sale marks the first exit from Genstar VI, which raised about $1 billion in 2012.

Jean-Pierre “JP” Conte, chairman and managing director of Genstar, declined to comment on the return figure. He said the firm transformed the company to a growth rate of 15 to 20 percent, compared to a mostly flat performance when it was purchased four years ago.

“It’s in a compelling market with tailwinds, plus it has the best management team in the sector, and it’s taking market share,” Conte said.

Genstar brought in ERT’s current CEO Jim Corrigan, a former executive at GE Healthcare, who the firm had known two years prior to its purchase of the company. Genstar also orchestrated three add-on deals for ERT: invivodata, eClinical Insights, and PHT Corporation to boost its presence in the clinical outcome assessment business.

“The add-on deals accelerated the growth of the company,” Conte said.

Conte said the firm continues to focus on “yards after the catch,” which means transforming a company after a purchase to produce gains despite a high-priced environment.

Genstar already had about a decade of experience in the clinical trial sector through its ownership in pharmaceutical services company PRA, which it sold to Kohlberg Kravis Roberts in 2013.

Genstar decided to sell ERT in an auction process run by Jefferies because “we knew we had a big built-in gain” and “the company had huge momentum, so it was time to move on,” Conte said. Genstar had been approached by several buyers about ERT.

Action Item:  For information on ERT, https://www.ert.com/

Photo courtesy of ShutterStock