Pharmaceutical services company INC Research is looking to sell 8.1 million shares of stock with a target price between $17 and $20 per share with its initial public offering of common stock.
The Raleigh-based company estimates in its latest securities filing that it would receive net proceeds of $135 million after such a sale, assuming its shares fetch the midpoint price of $18.50 each and excluding fees associated with the IPO.
INC is planning to sell a 16 percent stake in the business. Consequently, if its shares fetch $18.50, the company’s market capitalization – that is, the total value of its outstanding stock – would exceed $900 million.
INC, which has about 5,500 employees worldwide, including more than 850 in Raleigh, filed plans to raise money with an IPO earlier this month. But, as is customary, that initial filing omitted a number of details.
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INC plans to use the proceeds from an IPO to pay down some of its $588 million in debt.
INC is a contract research organization, or CRO, that helps pharmaceutical and biotechnology companies test experimental drugs.
The company’s latest filing also updates its financial results. Through the first nine months of this year, INC generated $26.3 million in net income, reversing a loss of $28.6 million for the same period a year ago.
Revenue over the first nine months totaled $596 million, up 25 percent from a year earlier.
Today, 68 percent of INC is owned by Avista Capital Partners, a private equity firm with more than $5 billion in assets under management. Twenty-nine percent is owned by a Canadian public pension fund, the Ontario Teachers Pension Plan.
After an IPO, they would still own a controlling stake in the business – with Avista alone owning 50.8 percent, assuming that the underwriters exercise their option to acquire additional shares after the IPO.
INC’s filing cautions that the interests of the controlling shareholders could conflict with other shareholders. Being a “controlled company” also would exempt INC from certain corporate governance requirements designed to protect shareholders, such as ensuring that a majority of the company’s board of directors are so-called independent directors.
The Triangle is the epicenter of the worldwide CRO industry and home to the world’s largest CRO, Quintiles. A second Triangle CRO, PRA Health Sciences, also has filed plans for an IPO.
A third Triangle company that was planning an IPO, Durham drug-developer Viamet Pharmaceuticals, withdrew its plans last week and raised $60 million from private investors instead.