THL Partners to acquire clinical trial firm Headlands from KKR

By Sabrina Valle

NEW YORK, Aug 14 (Reuters) - Private equity firm THL Partners has agreed to buy a majority stake in Headlands Research, a U.S.-based network of clinical trial sites, from KKR KKR.N, the firms said on Thursday.

The deal is valued at about $600 million, according to people familiar with the matter who spoke on condition of anonymity.

Clinical trial sites are experiencing steady growth as big pharma ramps up research spending, driven by new therapies and the rising needs of an aging population. AI is speeding up drug development, and private equity firms are betting that faster discovery will boost demand for clinical trials.

"We are seeing some really exciting new types of medicine coming to market, and all those obviously have to go through clinical trials," Megan Preiner, managing director in THL's healthcare group, told Reuters.

KKR said it founded the company drawn by the potential to use technology to scale operations and consolidate a fragmented network of stand-alone sites.

"We typically haven't founded companies. Rather, we tend to acquire them and scale them up," said Ali Satvat, head of Health Care Strategic Growth at KKR. "But we didn't find a company out there that served biopharma companies adequately in the clinical trial site space. So, we saw an opportunity to build a leading network to address this gap in the market."

THL has been active in pharma services for more than two decades, with past investments including Syneos Health, PCI Pharma Services, Adare Pharma Solutions and Red Nucleus.

The transaction marks an exit for private equity firm KKR, which founded Headlands in 2018 and is said to have multiplied its investment, according to a person familiar with the matter.

KKR's exit from Headlands followed its successful divestment of PRA Health Sciences, a clinical research organization where it delivered a six-fold return for investors. Icon bought PRA in 2021 for $12 billion.

Recent deals by private equity firms in clinical trials include BayPine's $1.5 billion acquisition of CenExel, and Genstar Capital's majority investment in Flourish Research, for an undisclosed amount.

Headlands operates more than 20 sites and has conducted more than 5,000 trials in therapeutic areas including central nervous system disorders, vaccines, and metabolic diseases.

Headlands CEO Kyle Burtnett expects clinical trial investments to grow at single to upper-single-digit rates over the next five years.

"It's a very solid growth rate highlighting the strength of the sector," Burtnett said.

In a joint press release announcing the deal, the companies said the deal "will fuel Headlands' continued expansion, enhance its technology and centralized infrastructure and further strengthen its ability to deliver high-quality, diverse clinical trial data for pharmaceutical and biotech sponsors."