IMS deal shows life, if not strength, in leveraged buyouts

(Recasts lead)

If a deal can’t get done with the backing of Canada’s pension fund and capitalism’s mightiest bank, then the leveraged buyout market would truly be dead.

So it is with limited fanfare that DealZone welcomes the buyout of IMS Health by Canada’s public pension plan and Goldman Sachs as a sign of the market’s return to health. Green shoots in the LBO patch are hardly growing all jack-and-the-beanstalk, but putting together $4 billion for the prescription drug sales data provider is not just ice on the moon either.

Excluding debt, the $22-a-share cash deal is the biggest leveraged buyout since Bristol-Myers Squibb sold its ConvaTec unit to Avista Capital and Nordic Capital just over a year ago for $4.1 billion, according to data from Thomson Reuters.

Financing markets and general optimism have improved from the nadir of the crisis, and debt, if you can find it, is hardly expensive, with core rates at zero. But $4 billion pales in comparison with strategic deals in the health space this year, such as Wyeth’s $68 billion union with Pfizer.

It is safe to say, though, that had the IMS deal foundered, it would have been a far worse signal for LBOs than its success means for the relative health of the business.

CalPERs private equity stakes under microscope

London-based private equity research firm Preqin has been busy crunching numbers from historical sales of pension fund giant CalPERS’ private equity assets.

The California pension fund sold $2.1 billion of private equity assets in late 2007 in the secondary market — which trades private equity stakes between the pension funds and endowment funds that want to exit or buy.

CalPERS updated information on its Website earlier this week giving fund data up to June 30. The tables are detailed, and forensic work is needed to work out the funds exited or bought into. Preqin said in a press release today that the net asset value of funds sold equates to 9 percent of CalPERs overall portfolio, and calculates the remaining value of its private equity portfolio at $21.5 billion.