The German stock exchanges are currently on a record course, and the healthcare industry is attracting the interest of many investors, especially during the Corona crisis. Europe’s largest laboratory chain Synlab is therefore seizing the opportunity and planning an IPO in Frankfurt this quarter.
Synlab offers 5,000 different tests
A PCR test for school children disguised as a lollipop. A look into the hearty dog eyes – even the fittest four-legged friend has to go to the doc at some point. It is these images on the company’s website that show the entire breadth of the product range.
Synlab has more than 5,000 different test types on offer, including the PCR tests for the coronavirus, which brought the laboratory service provider double-digit growth rates in the past year. In August 2020, UEFA commissioned the Bavarian company to test players, officials and referees for Corona. A prerequisite for this was Synlab’s global presence in now 36 countries.
20,000 employees work for Synlab
Synlab was founded in 1998 as a GmbH based in Augsburg as the “Association of Independent Laboratory Doctors”. The laboratory service provider is now part of the Cinven holding company. Synlab merged with French Labco in 2015. Since then, the company has grown rapidly, now with 20,000 employees and 450 laboratories. For this year, the board is expecting annual sales of more than three billion euros.
Most medical decisions are based on laboratory tests. But it is no longer just about the correct diagnosis of (hereditary) diseases. Because chronic diseases are on the rise, because early detection and prevention of diseases are becoming more and more important, the demand for medical test procedures and the associated data is likely to continue to rise.
Laboratories like Synlab are also working more and more for private customers
In addition to the hospitals and clinics that are outsourcing more and more laboratory services, direct contact with private customers is also becoming increasingly important. On the one hand, more and more people want to test themselves to find out something about their own state of health. On the other hand, patients in many European countries, such as Spain or Italy, can decide for themselves which service provider should carry out the test after they have their doctor’s prescription in their hands.
Synlab’s IPO is expected to bring in EUR 400 million
In a telephone press conference in Munich, the Management Board emphasized with a view to the competition that Synlab was the only company in the five most important European markets to have a strong position. Indeed, the industry is very fragmented. Synlab has taken over an average of 20 smaller companies per year since 2017. The company intends to continue growing in the medium term, primarily through acquisitions.
The proceeds from the IPO in Frankfurt should be 400 million euros. Earlier speculations that the total value of the company could be up to six billion euros have not yet been officially confirmed by anyone. When asked about the details of the IPO, the board of directors was also very monosyllabic. Both new shares from a capital increase and shares from the holdings of existing shareholders are to be brought onto the market.
So it is not yet clear to what extent the existing shareholders around the British private equity investor Cinven will withdraw, and from which stake the investment company wants to separate itself. Novo Holding and the Ontario Teachers’ Pension Fund (OTTP) are still holding larger packages.
Above all, the IPO is also intended to repay debts that Cinven imposed on Synlab and Labco in 2015. The first dividend is planned for the coming year.