DRI Healthcare PLC (DHP) DRI Healthcare PLC: Proposed listing on the London Stock Exchange 12-Feb-2020 / 07:00 GMT/BST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area, Canada, Australia, Japan or the Republic of South Africa. DRI Healthcare Plc Proposed listing on the London Stock Exchange Publication of prospectus in relation to the Initial Placing, Offer for Subscription and Intermediaries Offer targeting the issue of 350 million ordinary shares at US$1.00 per Ordinary Share 12 February 2020 DRI Healthcare plc (the "Company"), a closed-ended investment company focused on investments in healthcare Royalty Assets, today announces the publication of a prospectus in relation to an initial public offering ("IPO") of shares on the premium segment of the main market of the London Stock Exchange. The Company is seeking to raise US$350 million by way of an Initial Placing, Offer for Subscription, Intermediaries Offer and certain direct placings by the Company as principal of Ordinary Shares, forming part of a Share Issuance Programme of up to 1,000 million Ordinary and/or C Shares (including any Ordinary Shares issued pursuant to the Initial Issue) (see note 1). The Company will seek to generate attractive, risk-adjusted total returns by predominantly investing in a diversified portfolio of healthcare Royalty Assets, concentrating on investments in best-in-class pharmaceutical Products indicated for treatment of serious and chronic conditions and marketed by high quality Marketers. The Company is targeting in respect of its first financial year after Initial Admission, an initial annual dividend on the Ordinary Shares of 5.5 cents and, thereafter, a Target Dividend on the Ordinary Shares of 7.0 cents for each financial year with the intention to progressively grow the Target Dividend over the medium term (the "Target Dividend"). Additionally, the Company is targeting the potential for Ordinary Shareholders to receive 8 to 10 per cent. base case net total NAV return on the Initial Issue Price (inclusive of the Target Dividend), with upside potential, based on the performance of the Assets over the long term (the "Target Return"). (See note 2). The Company will be managed by Toronto-based DRI Capital, Inc. ("DRI" or the "Investment Manager") and intends to acquire a seed asset portfolio consisting of twenty cash flow generating healthcare Royalty Assets with an aggregated net asset value of US$290 million following the completion of the Initial Issue. DRI intend to invest up to US$20 million in the Initial Issue. Numis Securities Limited ("Numis") is acting as Sponsor and Joint Bookrunner and Jefferies International Limited ("Jefferies") is acting as Global Coordinator and Joint Bookrunner in relation to the IPO. The prospectus is available to download at https://www.drihealthcare.com/ and from the National Storage Mechanism (www.morningstar.co.uk/uk/NSM). Paul Mussenden, chair of DRI Healthcare Plc, commented: "Today represents a landmark for DRI Healthcare, providing investors with the opportunity to gain global exposure to our portfolio of leading pharmaceutical royalties. With diversified, tier-one assets, the Company provides the potential for significant returns, including a sustainable income target with limited downside risk. Investors will benefit from DRI Capital's 17 years of market-leading experience, led by its dedicated team who will target further investment opportunities, underpinned by a differentiated sourcing model, rigorous due diligence and disciplined investment strategy. Listing on the London Stock Exchange provides the ideal platform for DRI Healthcare to continue to grow its long-dated assets and deliver on its strategic objectives". Behzad Khosrowshahi, CEO of DRI Capital, Inc., added: "DRI Healthcare's intention to float will enable us to bring our deep expertise and significant experience in pharmaceutical royalty investment to global investors. By using its established and disciplined investment strategy, DRI Capital focuses on sustainable royalties on proven and speciality medicines that benefit from strong intellectual property and regulatory protection. With global healthcare spending expected to reach US$1.5 trillion by 2023, we continue to see compelling growth opportunities in the pharmaceuticals sector and associated increases in sales, development and the approval of new drugs. This has driven a corresponding rise in life sciences royalties, and DRI Capital remains uniquely positioned to leverage these trends, with its unparalleled track record and a compelling investment proposition. Our activities and investments in the sector also continue to support wider R&D activities and the further development of pioneering new drugs." Investment Highlights Attractive Industry Fundamentals · The pharmaceutical market has grown steadily, even in the face of recessions and other market downturns. This is demonstrated in the US by the growth in prescription drug sales that is largely uncorrelated to the stock market performance. · The worldwide pharmaceutical market is expected to experience steady growth over the next five years, propelled in part by penetration of existing pharmaceutical products in developed markets and the introduction of additional products. · DRI believes that there will continue to be a stable, inelastic demand for the products in which it invests, namely drugs with a meaningful value proposition for patients, payers, and physicians. Predictable and Uncorrelated Cash Flow Generating Investment Strategy · Cash flows that are derived from sales of underlying pharmaceutical products without exposure to the risks of clinical development and the costs of marketing or manufacturing the product. · Returns from royalty investments are uncorrelated to other asset classes or macroeconomic trends. · Pharmaceutical products generate predictable cash flows due to the highly regulated nature of the pharmaceutical industry. · Approved drug products benefit from regulatory and patent protection that prevents direct competition from generic or biosimilar products. · Due to the lengthy and transparent clinical trial process required to develop a drug, there is visibility into the potential future competitors that may take market share. · Debt assets will allow the Company to pursue investment opportunities in products with compelling value propositions where there may not be a royalty entitlement to purchase. Differentiated Sourcing Model · DRI has developed a systematic and repeatable approach to sourcing transactions from inventors, academic institutions, small biotechnology companies and large PharmaCos. · The Company will benefit from DRI's unparalleled ability to identify and execute royalty transactions as a result of (i) the relationships with key decision makers that DRI has built and maintained at academic and corporate institutions over the last two decades and (ii) DRI's proprietary database that tracks over 6,500 known or potential royalty entitlements on approximately 2,000 drugs. · Furthermore, through asset diligence and continual review of the pharmaceutical market, the Investment Manager is actively identifying pharmaceutical products that it believes to have compelling value propositions for patients, payers, and physicians. · The Investment Manager intends to leverage these product insights and its relationships to source debt transactions from companies that may have a need for capital but do not have a royalty asset to divest. Rigorous Due Diligence Process · DRI's comprehensive due diligence process has been developed over 17 years of evaluating and forecasting sales of life sciences products. · DRI's team operates in a highly integrated manner to conduct due diligence that incorporates a detailed scientific, financial, intellectual property, regulatory, and legal review. · The diligence process that the Investment Manager undertakes for each transaction is performed internally and complemented by external expert advice. · The Investment Manager leverages insights from its extensive experience, proprietary data sources, and historical analyses to perform a rigorous and disciplined due diligence on potential transactions. Track Record · DRI has raised US$2.6 billion across three funds and a co-investment vehicle, generating a projected gross unlevered IRR of 20.2 per cent. and gross multiple of 1.8x, and a projected net IRR of 21.9 per cent. and net multiple of 1.8x, on an aggregate basis. (See note 3 below). · DRI has acquired 62 royalty streams on 40 products that are estimated to generate in excess of US$3.5 billion in revenue. Investment Objective The Company will seek to generate attractive, risk-adjusted total returns, primarily through the distribution of income to Shareholders. Investment Policy The Company will seek to achieve its Investment Objective through investing in a diversified portfolio of investments, predominantly through direct or
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