(Bloomberg) -- Buyout firm PAI Partners is seeking to rope in two of the world’s largest sovereign wealth funds to back its offer for French drugmaker Sanofi SA’s consumer health division, according to people familiar with the matter.
Abu Dhabi Investment Authority, which controls almost $1 trillion, and Singapore’s GIC Pte are in talks to team up with PAI, the people said, asking not to be identified as the matter is private. They will be competing with rival buyout firm Clayton Dubilier & Rice, which is also preparing a binding offer ahead of a September deadline, according to the people.
A deal could value the business at as much as €15 billion ($16.7 billion), Bloomberg News has reported. Deliberations are ongoing and details including the bidders and their consortium could still change, the people said. Representatives for ADIA, CD&R, GIC and PAI declined to comment.
Sanofi is reviewing potential separation scenarios for the consumer business with a transaction in the fourth quarter the earliest and the preparation is on track, its representative said. The company is keeping all options open including a listing and a sale, while it expects to pick the best option in the next few months, the representative said, adding that no final decision has been made.
Buyout firms have increasingly turned to large sovereign investors to back their acquisitions with equity checks amid higher financing costs. ADIA and GIC have emerged as among the most active in providing capital to some of the largest transactions led by private equity firms in the last few years. ADIA teamed up with investors including CVC Capital Partners Plc on a transaction to take Hargreaves Lansdown Plc private for about £5.4 billion ($7.1 billion). GIC and ADIA are also backing CVC in its bid for Deutsche Bahn AG’s logistics unit DB Schenker, which could be valued at about €15 billion or more.
Sanofi announced its plans to review all options to split the consumer health unit last October, as it looks to generate better long-term value from cutting-edge therapies, particularly in immunology or in vaccines. The drugmaker is likely to retain a significant minority stake in the business after any sale, which would reduce the amount of capital that bidders need to commit, people familiar with the matter have said. It’s also simultaneously moving forward with preparations for a possible listing of the business.
PAI has been hoping its status as the only French bidder should place it in a pole position to buy the business, Bloomberg News has reported. French state-own investment firm Bpifrance SACA is also looking at a potential investment the Sanofi arm and may team up with the winning bidder, its executive director Jose Gonzalo told reporters on July 4.
--With assistance from Tim Loh.
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