Singapore’s GIC looks for lab rat liquidity

An employee carries test tubes inside a laboratory at Piramal's Research Centre in Mumbai August 11, 2014. REUTERS/Danish Siddiqui

NEW YORK, July 27 (Reuters Breakingviews) - It has been a great year to sell firms that run clinical trials for drugmakers. Now Singapore’s sovereign wealth fund GIC is seeking some lab rat liquidity, too. It’s floating WCG Clinical in an initial public offering that could give the firm a toppy market capitalization of more than $6 billion.

Long- and short-run trends are both favorable for these businesses. Biotechnology firms are outsourcing more drug development work, and trials are becoming bigger and more complex. The result is steady revenue growth over the long run. And this year will be even better as pandemic-delayed work comes home. WCG’s first-quarter revenue grew by a third compared to last year.

But valuations are starting to presuppose success. At the top of the range, WCG’s enterprise value would be over $7 billion. That’s 32 times its adjusted EBITDA for last year. In February, Dublin-based ICON bought PRA Health for $12 billion, or about 24 times historic adjusted EBITDA, and its stock fell 8% on that news as investors reckoned it overpaid. (By Robert Cyran)

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Editing by Lauren Silva Laughlin and Amanda Gomez

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