RLPC-3i consortium kicks off sale of Labco - sources

LONDON Wed Oct 3, 2012 7:40am EDT

LONDON Oct 3 (Reuters) - A consortium led by private equity firm 3i has kicked off the sale process for its majority stake in French medical-diagnostics company Labco, banking sources said on Wednesday.

Paris-based Labco, in which management and a group of laboratory doctors also own a stake, could fetch around 1 billion euros ($1.3 billion), which would see troubled 3i make a profit on its 2008 investment in the firm, the sources said.

The consortium, which also includes investors TCR Capital, Natixis Investment Partners and CIC Finance, has hired Rothschild to handle the sale process which started this week.

Bain Capital, Blackstone, EQT and PAI are among private equity firms that have expressed an interest in bidding for Labco, the sources said, while declining to give further details on the size of the stake that is up for sale.

3i has a "drag along clause," which means that if it sells its stake, other shareholders could be forced to sell, said one person familiar with the matter.

3i, which declined to comment, is under pressure to revive its business due to the underperformance of its flagship 5-billion-euro fund, which has suffered from high prices paid for companies during the peak of the buy-out market. .

Labco is likely attract interest from other private equity firms as healthcare is a favoured sector due to its relative stability in an uncertain economic climate and banks are keen to provide debt financing for healthcare deals, bankers added.

Financing for private equity buyouts fell to its lowest level since 2009 in the third quarter of 2012, a ccording to Thomson Reuters LPC data, as dealmaking has slowed and banks have been reluctant to underwrite large cheques.

The 3i-consortium acquired Labco, which operates over 250 laboratories for patients, general practitioners and hospitals, in 2008. 3i made the largest investment in the company with 140 million euros.

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