As one of the world’s largest IP service providers mulls $2.5 billion sale, Asian buyers will see a huge opportunity 03 Apr 17
The owner of CPA Global – one of the world’s largest providers of non-legal IP and trademark services – is exploring a possible sale or floatation of the business, according to media reports this weekend. If recent moves in the IP services market are anything to go by, we can expect Asian investors to be among the most interested parties on the buy-side.
Quoting anonymous sources, the Sunday Times reports that Cinven, the UK private equity firm that owns CPA, has requested proposals from banks in order to put together a plan for auctioning off the service provider.
Cinven acquired CPA from London-based asset management firm Intermediate Capital Group (ICG) back in 2012 in a deal reportedly worth around £950 million ($1.45 billion). ICG had itself acquired a 49% stake in CPA as part of a management buyout it financed in 2010, when the company was valued at £440 million ($709 million). The Times reports a current asking price of £2 billion ($2.5 billion) for CPA, meaning that the IP services business has more than doubled in value in the past five years (devaluation of sterling in the wake of the Brexit referendum vote notwithstanding).
Clearly, investors are seeing plenty of potential in non-legal IP services. CPA itself has been an active acquirer of such businesses, having snapped up smaller competitors such as Patrafee, First To File, Landon IP and Innography in recent years. City AM suggests that US private equity player KKR is already eyeing CPA, while the firm is also “expected to fetch bids from sovereign wealth funds and Chinese giants”.
In particular, the likelihood of interest from Chinese and other Asia-focused investors is borne out by recent transactions in the non-legal IP services space. In October last year, Thomson Reuters completed the headline $3.55 billion sale of its IP services business – now named Clarivate Analytics – to Hong Kong-based Baring Asia and Canada’s Onex Corporation. At the time, Jean Eric Salata, CEO and founding partner at Baring, said that the private equity firm wanted to develop Clarivate to take advantage of a “differentiated growth opportunity” presented by the Asia market, adding: “Already an established leader in China and across the region, we believe the outlook for the business is underpinned by an increasing shift towards more knowledge-driven economies and a continued emphasis on research and development.”
In another China-led deal, Beijing-based firm Shunwei Capital – which is headed up by Xiaomi founder and CEO Lei Jun – was a key participant in Series C funding of IP analytics start-up PatSnap.
When World Trademark Review last performed a reader survey on the non-legal IP services market in 2015, respondents ranked CPA Global fifth out of five service providers for its software offering, third our of four for its renewals and recordals services, and third out of three for trademark watching. In the time since, the company – which has historically had a patents focus – has bolstered its trademark offerings and, as mentioned, has engaged in a number of acquisitions.
Earlier this month CPA Global’s CEO Simon Webster additionally told World Trademark Review that the company has recently focused investment on platform offerings and is looking to launch a “wave of technologically based trademark solutions” via The IP Platform it launched late last year (with new offerings to be unveiled at this year’s INTA Annual Meeting).
Therefore, the company is clearly focused on consolidating and bolstering its offerings, and this will likely increase the interest of circling investors. Given recent developments in the market, it would not be a surprise if Asian finance was front of the queue.
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