Quintiles Transnational made a big splash with its second initial public offering since the company started up in 1982, raising US$947.4 million in an IPO that was substantially larger than the US$789.5 million best-case scenario presented around two weeks earlier.

The demand saw Quintiles’ share price rise from an offering price of US$40 to US$42.11 on the initial day of trading. At the time of writing, the shares were trading at about US$43 on the New York Stock Exchange.

Around 55% of the proceeds will go to Quintiles itself and the rest to selling shareholders including Quintiles co-founder Dennis Gillings.

When the US-based provider of biopharmaceutical development services and commercial outsourcing services first announced the IPO in February, ending months of speculation about its future ownership, the company said it aimed to raise up to US$600 million.

That was a registration formality, though, and Quintiles did not say at the time how many shares it would offer or the associated price range.

Registration statement

In an updated registration statement filed with the US Securities and Exchange Commission on 26 April, Quintiles offered 19,736,842 shares in an expected price range of US$36 to US$40 per share.

Of the total, 13,815,789 shares of common stock came from the company itself and an additional 5,921,053 from the selling shareholders.

In the event, the price was at the top of the range and the IPO was for 23,684,210 shares of common stock, with Quintiles offering 13,125,000 and the selling shareholders 10,559,210.

As an illustration of how much value Quintiles has gained over the last 19 years, the company’s original IPO in 1994 raised US$35.5 million, compared with more than US$947 million in last week’s offering.

In September 2003 a group of investors including Gillings took Quintiles private, and in January 2008 a shareholder re-organisation brought private equity interests on board – namely Bain Capital Partners, TPG Global, 3i and Temasek Holdings.

Net proceeds

The 28 April registration statement assumed net proceeds to Quintiles of around US$489.8 million, based on the sale of 13,815,789 shares at a mid-range price of $38.00 per share.

Working on that assumption, the company said it intended to use some US$306.0 million of the proceeds to pay all amounts outstanding under a US$300 million term loan taken out in 2012; about US$50.0 million for repayments under its senior secured credit facilities; and US$25.0 million for a one-time fee to terminate its management agreement with Gillings and sponsors.

Growth opportunities

Any remaining proceeds would be used for general corporate purposes, including “strategic growth opportunities”, Quintiles noted.

Among these opportunities might be “the acquisitions of businesses that would broaden our service lines or deepen our scientific, therapeutic or technical expertise”.

Quintiles common stock is trading on the New York Stock Exchange under the single-letter symbol ‘Q’.