Private equity firm Advent International has bought bulk drugs maker ZCL Chemicals for Rs 2,000 crore (around $275 million), offering exits to founder-promoters Parikh family and Morgan Stanley Private Equity Asia.
The family has sold 80% of the firm for Rs 1,610 crore. Of this, about 26% will be transferred subject to customary closing conditions and regulatory approvals.
Morgan Stanley, which had picked up around 20% in 2016 for Rs 150 crore, has exited the company with around Rs 390 crore.
This development comes after Advent last month announced that it had signed a definitive agreement to acquire a majority stake in the bulk drugs manufacturer.
VCCircle reported last year that ZCL Chemicals had initiated talks to provide an exit to Morgan Stanley. Earlier this year, VCCircle reported that the bulk drugs maker had attracted bids from four groups, including Advent.
The Parikh family says it acquired ZCL Chemicals from Zandu Pharmaceuticals Ltd at an equity valuation of Rs 12.5 crore in 2008. “ZCL Chemicals has emerged as India’s fastest-growing pharma company in the last 12 years. We are excited to achieve this strategic outcome for ZCL Chemicals and its investors through this divestment,” company founder and promoter Nihar Parikh said.
According to VCCEdge, ZCL Chemicals reported consolidated net sales and post-tax profit of Rs 261 crore and Rs 58.7 crore for the 2019-20 financial year.
It operates in the active pharmaceutical ingredients space, and has a facility at Ankleshwar in Gujarat. The company is export-oriented with more than 90% of its revenues coming from markets in Europe and North America.
This is Advent’s second bet in the bulk drugs space and its third investment in the pharmaceuticals segment. In July last year, the PE firm agreed to acquire a controlling stake in RA Chem Pharma Ltd from Bengaluru-based Micro Labs Ltd.
Besides Advent and a PAG-led consortium, the Carlyle Group is also working towards building an API platform. The global PE firm said last year it is acquiring a majority stake in SeQuent Scientific Ltd, which makes animal healthcare APIs.