Target: IMS Health Holdings Inc
Price range: $18 to $21 per share
Valuation: Up to $6.97 billion
Sponsors: TPG Capital, the Canada Pension Plan Investment Board and Leonard Green & Partners LP
Lead Underwriters: JPMorgan Chase, Goldman Sachs, Morgan Stanley
The company said the sale of 65 million shares was expected to raise about $1.36 billion, based on the top end of the price range, sister news service Reuters reported. IMS said it would sell 52 million shares in the offering, with the rest being offered by shareholders.
“Right now there is big demand for IPOs that are subscription and cloud based,” said Francis Gaskins, research director at Equities.com.
IMS provides prescription data to drugmakers, medical device companies, governments agencies and policymakers and also publishes analytical reports on the global healthcare industry. The company said 90 percent of its information revenue in last three fiscal years came from subscription or license-based contracts.
Founded in 1954, the company has more than 5,000 clients and operates in more than 100 countries, according to its website. IMS had a total debt of $4.96 billion as of Dec. 31, according to the IPO filing.
The company was taken private in 2010 by TPG Capital, the Canada Pension Plan Investment Board and Leonard Green & Partners LP for $5.2 billion, including debt. After the offering, TPG Capital’s stake will be diluted to 50 percent from 62.2 percent, without underwriters exercising their full option.
TPG, CPPIB and Leonard Green each stand to nearly triple their investment in IMS Health in three years, sister website peHUB reported. The sponsors have received about $2 billion in dividends. This includes a $753 million distribution that IMS paid in 2013 to its stockholders, according to SEC filings. Another “one time” dividend came in October 2012 when IMS issued a $1.19 billion payout to shareholders, a Moody’s Investors Service report said.
TPG, as the lead sponsor, invested $1.74 billion and has returned $1.24 billion to investors through cash paid out in dividends, peHUB calculated. The firm stands to receive a further $278.2 million by offering 14.27 million shares in the IPO, including the “green shoe” overallotment option, at $19.50 per share, the midpoint of the price range, and its remaining 159.7 million shares would be worth $3.1 billion at the $19.50 share price following the IPO. This yields a potential return of 2.65x.
CPPIB invested $728 million and has received about $520 million through dividends, peHUB calculated. The Canadian pension, which is known for its direct investments, stands to receive $117 million through the IPO, where it is selling about 6 million shares, including the green shoe, and will hold 67 million shares worth $1.3 billion, for a potential return of 2.66x.
Leonard Green, which invested $300 million, has received $214 million in dividends and stands to receive $48 million from selling 2.5 million shares in the IPO, leaving it with 27.5 million shares worth $536.25 million at the midpoint of the range, giving it a potential return of 2.66x, peHUB calculated.
Executives of IMS Health, TPG, Green and CPPIB declined comment.
IMS Health has been highly acquisitive, Reuters noted, buying 11 other companies since its buyout, according to its website. Five of these — Pygargus, Incential Software, 360 Vantage, Semantelli and Appature — were acquired in 2013. IMS’s operating income rose to $276 million in the nine months ended Sept. 30 from $173 million a year earlier. Revenue increased 4 percent to $1.87 billion.
JPMorgan Chase, Goldman Sachs and Morgan Stanley are the lead underwriters to the offering, IMS said. Danbury, Connecticut-based IMS said it expected to list its common stock on the New York Stock Exchange under the symbol “IMS.”
Earlier in March, shares of healthcare information provider Castlight Health Inc rose more than 160 percent in their debut, making the listing the strongest by a technology company so far this year.
Neha Dimri is a correspondent for Reuters in Bangalore. Luisa Beltran is a senior writer for peHUB.