Anderson Investments Temasek

[Oliverio Gallman]

LONDONMay 21, 2024 /PRNewswire/ -- Specialist Risk Group ("SRG"), the fast-growing, people and culture focussed, specialist insurance intermediary has today announced that it has signed a definitive agreement to be acquired by Warburg Pincus, a leading global growth investor, and Temasek, a global investor. Closing is subject to customary closing conditions, including regulatory approvals. SRG's management team will invest alongside Warburg Pincus and Temasek and will continue to hold a significant stake in the business.

SRG was launched in January 2020 under the leadership of Group CEO Warren Downey and Group Deputy CEO Lee Anderson and currently employs over 600 people and places premiums of more than 1 billion. A combination of strong organic growth and a series of strategic investments and acquisitions has seen SRG grow dramatically into the natural home for specialist people and businesses since its inception.

"We are thrilled to be partnering with such outstanding investors as Warburg Pincus and Temasek. They are ideal partners who will provide the support and firepower we need as we embark on the next exciting stage of our growth journey.

I would like to take this opportunity to thank HGGC for their support over the last 3 years, we have thoroughly enjoyed working with them during this time, and their involvement has played a significant role in SRG becoming what it is today."

HGGC / SRG were advised by Evercore (financial advisor) and Kirkland and Ellis (legal advisor). Warburg Pincus was advised by Macquarie Capital (financial advisor) and Freshfields Bruckhaus Deringer (legal advisor). Management was advised by Liberty Corporate Finance and Eversheds (legal advisor).

About Specialist Risk GroupSpecialist Risk Group is an insurance intermediary bridging Retail, Wholesale, International and Underwriting disciplines. Founded under the mantra, "Building a company we are proud to tell our friends and family about" SRG is rapidly becoming natural home for specialist people and businesses. The business focusses on specialisms in which it can take a leadership position and now numbers 640 staff, places premiums of 1bn.

About Warburg PincusWarburg Pincus LLC is a leading global growth investor. The firm has more than $81 billion in assets under management. The firm's active portfolio of more than 250 companies is highly diversified by stage, sector, and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Since its founding in 1966, Warburg Pincus has invested more than $116 billion in over 1,000 companies globally across its private equity, real estate, and capital solutions strategies. The firm is headquartered in New York with offices around the globe.

About TemasekTemasek is a global investment company with a net portfolio value of S$382 billion (US$287b, 232b) as at 31 March 2023. Its Purpose "So Every Generation Prospers" guides it to make a difference for today's and future generations. As an active investor, forward looking institution and trusted steward, it is committed to deliver sustainable value over the long term. Temasek has overall corporate credit ratings of Aaa/AAA by rating agencies Moody's Investors Service and S&P Global Ratings respectively. Headquartered in Singapore, it has 13 offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and London, Brussels, Paris, New York, San Francisco, Washington DC, and Mexico City outside Asia. For more information on Temasek, please visit www.temasek.com.sg

About HGGCHGGC is a values-driven, partnership-focused private investment firm. The firm's ecosystem of investors, operators, and professionals are united by the shared mission to develop leading enterprises and build long term value together. HGGC invests in technology, business services, financial services and consumer enterprises generally valued between $200M - $1.5B+. The firm is based in Palo Alto, CA and manages over $6.9 billion in cumulative capital commitments. Since its inception in 2007, HGGC has completed more than 600 platform investments, add-on acquisitions, recapitalizations, and liquidity events with an aggregate transaction value of over $71 billion. More information, including a complete list of current and former investments, is available at www.hggc.com.

A battle to consolidate the chemistry, manufacturing and controls (CMC) development sphere is shaping up between Aptuit (Greenwich, CT, www.aptuit.com) and Fisher Clinical Services (Allentown, PA, www.fisherclinicalservices.com), a unit of Fisher Scientific. The companies completed several high-profile acquisitions in 2005 and made announcements in April that indicated that the battle may be heating up.

The most recent volley was fired when Fisher Clinical said that it will acquire Clintrak Pharmaceutical Services (Bohemia, NY, www.clintrak.com) and its wholly owned clinical packaging subsidiary, Acculogix (Bristol, PA, www.acculogix-usa.com). Clintrak is a long-time leader in the production and supply of labels for clinical trial materials, a complex business in which accuracy and innovation are critical operating parameters. Acculogix, which was founded four years ago by several contract-packaging veterans, is a small but growing player in the clinical packaging arena. The company is known for its innovative software for managing and tracking the clinical packaging process. Clintrak's investors, which include Bear Growth Capital Partners, an affiliate of the investment firm Bear Stearns, will receive $125 million in cash for the Clintrak businesses, which had revenues of $31 million in 2005.

With Fisher Clinical's acquisition of Clintrak and McKesson BioServices, and Aptuit's consolidation of Quintiles Clinical Supplies and Almedica last year, the number of clinical packaging service providers is shrinking. In addition to Fisher Clinical and Aptuit, the four major players in the business include Cardinal Health (Somerset, NJ, www.cardinal.com/pts) and Clinical Trial Services (Audubon, PA, www.cts-almac.com), a unit of Almac Sciences. In addition, several smaller players are located in the United States and Europe, many of which offer just secondary packaging capabilities.

Consolidation in the clinical packaging industry is driven by the same factors that are consolidating the clinical research business: the increasingly global nature of late-stage clinical research (clinical packagers generate the largest share of their revenues from large Phase III clinical trials) and the efforts by Big Pharma companies to consolidate their supply base. To be a first-tier player, a clinical packager must have a global network of distribution points, sophisticated logistics know-how (including systems for tracking inventories and shipments), and global regulatory expertise. Only a few companies have the scale and financial backing to meet those criteria.

Though Fisher Clinical used acquisitions to extend its lead in clinical packaging, the deals also have given it a growing presence in other areas. The McKesson BioServices acquisition enabled it to enter the biological sample-storage business, a rapidly growing sector in this age of genetic medicine. Last years's acquisition of Lancaster Laboratories landed Fisher Clinical a market leader in analytical chemistry and microbiology.

Fisher Clinical executives have not said whether their strategy is to create a "category killer" in the clinical packaging space or to build a full-service development offering. Aptuit, on the other hand, stated its objective of building a one-stop clinical supply chain offering encompassing process development and manufacturing for active pharmaceutical ingredients (APIs) and dosage forms, analytical services, and packaging, tied together with sophisticated project management systems. Backed by the large private equity firm of Welsh, Carson Anderson and Stowe, Aptuit began operations in 2005 by acquiring the nonclinical businesses of Quintiles Transnational Corporation and Almedica. It recently acquired clinical trial software developer InfoPro Solutions.

Now, Aptuit has enlarged its treasure chest with a minority investment from Temasek Holdings Limited (www.temasekholdings.com.sg), a large private investment firm headquartered in Singapore. Temasek's portfolio spans a broad range of industries, but less than 3% of its $63-billion investments are in biotech, pharmaceutical, or related services. In June 2005, it entered into a joint venture with Quintiles and drug distributor Interpharma (Hong Kong, China, www.zuelligpharma.com/ip) to acquire and commercialize drugs for the Asian market.

Aptuit has made only the InfoPro acquisition thus far in 2006, but another one is expected shortly, probably in small molecule API development and manufacturing services. The company's strategy emphasizes API availability as a critical bottleneck that its business model intends to address. It recently announced the appointment of a senior director of API development, even though it does not yet have API manufacturing capabilities.

The last company we saw willing to make large investments in CMC services at high multiples was Cardinal Health, which created its Pharmaceutical Technologies and Services business in the late 1990s and early 2000s with a major buying spree. High prices and integration issues were major challenges for Cardinal Health, a concern of which Fisher and Aptuit managements are undoubtedly aware.

It's not clear to what extent the presence of these well-heeled and willing buyers will benefit investors in CMC development businesses that would be willing to be acquired. The multiples paid by Fisher Clinical, and the multiple paid by AmerisourceBergen in its recent acquisition of clinical packager Brecon Pharmaceuticals Ltd. (Hay-on-Wye, UK, www.breconpharm.com), suggest that there is big money to be made.

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