New Mountain Capital is looking to extend its hold over its portfolio company Datavant in a move that would provide additional capital to grow the business, sources told affiliate title Buyouts.
The Datavant process is among several that have run through the market this year in what has been a relatively muted market for GP-led secondaries. However, sources point to an influx of deals hitting the market toward the end of summer that may drive volume.
Part of the changing dynamic in secondaries from earlier in the year lies with traditional LP portfolio sales, where pricing on stakes in buyout funds has improved, ranging from a high-80 percent to a low-to-mid-90 percent of net asset value, sources said.
“That’s allowed the continuation fund market to re-open and things to get done at NAV,” said a secondaries market professional. “Some deals are getting done at a slight premium. I would describe the market as functioning on both the LP-led and GP-led side.”
New Mountain is running the single-asset process to transfer medical data-focused Datavant, which it acquired through a merger with its portfolio company Ciox Health in 2021. At the time, the combined entity had an enterprise value of $7 billion, affiliate title PE Hub reported at the time.
Goldman Sachs and Sixth Street also invested in the combined company, which was to be led by Ciox CEO Pete McCabe and operate under the Datavant brand, PE Hub reported. New Mountain created Ciox in 2016, merging four companies: HealthPort, IOD, Care Communications and ECS, which the firm acquired between 2015 and 2016, according to New Mountain’s website.
New Mountain invested in the company from its fourth fund, a source said, which closed on $4.13 billion in 2014. The deal will likely raise more than $1 billion, sources said.
Goldman Sachs is working as secondaries adviser on the deal. Goldman’s advisory team has experienced some departures over the past year, but continues to move forward, a source told Buyouts in a previous interview.
New Mountain is in market with its next flagship fund, targeting $12 billion, Buyouts reported in March. The firm ran a large continuation fund process in 2021, moving several assets out of its third fund and into a continuation pool.
GP-led deals represented about 35 percent of the estimated $50 billion of total secondaries volume in the first half, according to PJT Park Hill’s first-half volume survey.
Sources have said the market contains robust, “pent-up” demand among GPs to run processes on choice assets. Activity remains somewhat muted due to pricing expectations. This is the same dynamic that is keeping the regular M&A market slow.
Still, activity has remained steady in the mid-market, with a handful of processes finding their way to close. One such deal that has gotten a lot of attention is being run by Aterian Investment Management, which wants to move its asset Vander-Bend Manufacturing into a continuation fund, Buyouts recently reported.