Medline IPO provides a badly needed win for private equity

Medline yesterday jolted the sleepy IPO market, raising the largest offering in years and then watching shares pop more than 40%.

• It also might have restored faith in leveraged buyouts, at a time when many limited partners in private equity funds are questioning the model's viability.

Catch up quick: Axios wrote a lot about Medline when it was acquired in 2021, namely because it felt like a nostalgic throwback.

• For starters, the deal was huge. More than $30 billion, in what was one of the largest health-care buyouts ever. And over half the headline number was debt.
• Second, it was a club deal. Three private equity firms — Blackstone, Carlyle, and Hellman & Friedman — that each had identical stakes that, when combined, gave them control. There also was a few billion of sovereign wealth co-invest, while the founding Mills family remained Medline's largest single shareholder.
• Finally, this was never going to be flipped via a trade sale, as Medline was the market leader in hospital supplies by a country mile. Its new debt made a sponsor sale unlikely. Going public was always the goal.

The intrigue: There also was timing risk related to the COVID-19 pandemic.

• Medline's financials still were stuffed with revenue from products like masks, gloves, and testing kits. The buyers had to suss out how much of that excess demand would wane.
• Meanwhile, some rivals abandoned the space. McKesson announced plans to spin off its relevant business, while Owens & Minor last month agreed to sell its unit to Platinum Equity for $375 million.

Zoom in: Medline spent four years growing via over $1 billion in acquisitions and international expansion.

• It filed confidentially for an IPO at the end of 2024 and began serious conversations in March.
• But those plans got waylaid by President Trump's tariff rollout in early April, both because of their impact on Wall Street and also on Medline's actual business.

By the numbers: Blackstone, Carlyle, and H&F invested roughly $3.5 billion into the buyout, Axios Pro's Lucinda Shen reports.

• At yesterday's close, each of those stakes would have been valued at $9.3 billion. Minus any shares sold via a synthetic secondary tied to the IPO.
• It's the sort of return that can calm a lot of LP concerns (much like what SpaceX might do next year for VC fund LPs).

The bottom line: It feels weird to say that private equity needed a win. But it did.