Blackstone buys Ancestry.com with consumer and healthcare trends in mind

Private equity giant Blackstone this morning officially confirmed its purchase of Ancestry.com, the popular DNA testing and family history research website. It’s the first control acquisition for the private equity firm’s flagship private equity vehicle -- but the stake is symbolic of two major trends the $564 billion firm is seeking to capitalize as it sits on a record level of cash to put to work. The $4.7 billion purchase includes the stakes of other private equity firms: Silver Lake, GIC, Spectrum Equity and Permira. Of the group, only the Singaporean sovereign wealth fund GIC will continue to retain a significant minority stake in the company. “We believe Ancestry has significant runway for further growth as people of all ages and backgrounds become increasingly interested in learning more about their family histories and themselves,” said David Kestnbaum, a senior managing director at Blackstone. He added that Blackstone looks forward to investing behind further data, functionality and product development. The investment, he said, was a prime example of Blackstone’s focus on investing in growing, digital consumer businesses that are resilient in the current environment and beyond. The purchase is said to be of 75% of Ancestry, according to analysts at Tokyo-based wealth management company Akita Michinoku Capital. Blackstone, which boasts $156 billion in dry powder, has also invested other consumer companies as of late including plant-based drink maker Oatly AB, which has partners such as Oprah Winfrey. Blackstone also has a controlling stake in MagicLab, the creator of the dating app Bumble. "The Ancestry.com deal negotiations began a few months back when most of the world was sat at home looking for stuff to do," said Oliver Wright, director of corporate equities at Akita Michinoku Capital, just prior to Blackstone’s official announcement. Ancestry.com is headquartered in Lehi, Utah and has over 3 million paying subscribers and over 18 million people on its DNA network. It sells at-home DNA testing kits to customers and competes with 23andMe Inc. In 2009, Ancestry.com first went public and raised $100 million. In 2012, it went private in a $1.6 billion buyout deal led by private equity firm Permira and has since considered going public again on at least two occasions, though it never got the valuation it was aiming to achieve. Four years ago, Silver Lake and GIC purchased a majority stake in a deal which valued the business at $2.6 billion. Prior owners, including management, Permira and Spectrum Equity, also hold minority interests in the company. President and Chief Executive Officer of Ancestry Margo Georgiadis commented, “Looking ahead, in collaboration with Blackstone, we will continue to leverage our unique content, powerhouse consumer brand and technology platform to expand our global Family History business while bringing to life our long-term vision of personalized preventive health.” Blackstone also has a burgeoning life sciences investment platform. It has invested more than $1 billion this year on drugs that target high cholesterol, kidney disease in children and devices for patients with diabetes. Just this week, the firm Jeffrey B. Kindler, former Chairman and CEO of Pfizer and current CEO of Centrexion Therapeutics, as a senior advisor within its private equity division.

Blackstone buys Ancestry.com with consumer and healthcare trends in mind

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