January 30, 2013 / 11:56 PM / 5 years ago

UPDATE 1-Quintiles picks MS, Barclays, JPM for IPO-sources

* Bain, TPG lead investors in Quintiles

* Private equity-backed IPOs this year perform well

By Soyoung Kim and Olivia Oran

NEW YORK, Jan 30 (Reuters) - Quintiles Transnational Corp, the largest provider of testing services to drugmakers, has chosen Morgan Stanley, Barclays Plc and JPMorgan Chase & Co as joint bookrunners for a planned initial public offering, people familiar with the matter said on Wednesday.

Quintiles, owned by private equity investors that include Bain Capital LLC and TPG Capital LP, held “bake-off” talks with investment banks to appoint bookrunners for an IPO, Reuters reported last week.

The proposed offering would come five years after Bain and TPG became lead investors in Quintiles in January 2008, when One Equity Partners sold its stake in the Durham, North Carolina-based company. Britain’s 3i Group Plc and Singapore’s Temasek Holdings are minority investors in Quintiles.

Private equity-backed IPOs have put in a strong showing since the start of the year, prompting more buyout firms to consider a stock market flotation as a way to exit their investment.

Bain was not immediately reached for comment. TPG, Morgan Stanley, Barclays and JPMorgan declined comment. The sources asked not to be named because the matter is not public.

Quintiles relies on pharmaceutical companies outsourcing more of their non-core research functions. The company recorded net service revenue of about $3.5 billion for the 12 months to the end of June 2012, according to Moody’s Investors Service Inc.

Regulatory filings from publicly listed 3i show that the private equity firm valued its 7 percent stake in Quintiles at 109 million pounds at the end of March 2009, implying an equity value for Quintiles of 1.56 billion pounds ($2.46 billion).

By the end of March 2012, 3i valued its stake, that had dropped to 4.9 percent, at 86 million pounds, implying an equity value for Quintiles of 1.76 billion pounds ($2.77 billion). Nevertheless, an IPO could value the company substantially above or below such mark-to-market estimates.

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