PE Hub reports that Kohlberg & Co. is preparing an equity recapitalization of contract development and manufacturing organization PCI Pharma Services and has hired Jefferies to advise on an early 2025 process.

Kohlberg is hoping to bring on another investor to help finance PCI’s recently announced $365 million infrastructure expansion program, which includes a 545,000 sq. ft. injectables build-out at its Rockford, Illinois campus and new production facilities in Ireland.

Partners Group and Mubadala Investment Company also plan to hold their their minority positions through the recapitalization.

Since acquiring the business in late 2020 for more than $3 billion, Kohlberg has grown the Philadelphia-headquartered CDMO from around $170 million in EBITDA to nearly $500 million.

It’s been a story of continued momentum in the core high-potency manufacturing and packaging businesses, plus capabilities-focused inorganic growth, including the 2021 acquisition of Permira-owned LSNE for $1.5 billion — strengthening sterile fill-finish and lyophilization offerings.

For investors, PCI has been the gift that keeps on giving: it’s now delivered enviable performance for half a dozen sponsors over more than a decade.

Before selling to Kohlberg, Partners Group purchased the business in 2016 for around $1.1 billion from previous owner Frazier Healthcare Partners. Both Partners Group and Frazier rolled meaningful stakes in their respective sales.

Thomas H. Lee Partners also took a minority stake in 2016 alongside Partners Group. The firm opted to fully exit in the sale to Kohlberg, returning a reported 4.2 times its money and an IRR of around 50 percent.

Frazier’s second bite at the apple would have roughly matched THL, but its first exit might have been better.

Speaking to Fierce Healthcare in 2018, managing partner Nader Naini said that PCI “had less than $10 million of earnings when we acquired them in partnership with a Frazier operating partner,” and added that the business had since grown to “well north of $100 million.”

Bill Mitchell, the operating partner in question, had been the former president of Catalent Pharma Solutions’ US commercial packaging business, which Frazier acquired in 2012.

Within a year, the firm tacked on both AndersonBrecon, AmerisourceBergen’s consumer packaging arm, and high potency specialist Penn Pharmaceutical Services to form the core of PCI.