PE firm Advent International acquires 51% stake in ZCL Chemicals

Private equity firm Advent International has signed a definitive agreement to acquire a majority stake in ZCL Chemicals (ZCL), one the fastest-growing pharmaceutical firms in India. The business was formerly known as Zandu Chemicals.

According to people in the know, Advent picked up a 51 per cent stake in the entity, which has an enterprise value of Rs 1,700 crore. With this, Morgan Stanley Private Equity Asia (MSPEA), a private equity platform that previously managed a minority investment in ZCL, will exit the company.

ZCL was advised by Jefferies (Sole Financial Advisor), Bombay Law Chambers (Legal Counsel), and Deloitte (Finance and Tax).

ZCL is one of the fastest-growing manufacturers of specialty active pharmaceutical ingredients (APIs) and advanced intermediates.

ZCL’s highly specialised approach focuses on niche therapeutic areas, underpinned by complex chemistry, supported by a state-of-the-art US Food and Drug Administration-approved facility, along with strong research and development capabilities.

“ZCL will be our third pharmaceuticals investment in India and the second in the API space. It is a high-growth business, led by a capable management team, which will further fortify our presence in the API market, a key sub-sector focus of ours,” said Shweta Jalan, managing director and head of Advent International, India.

Over the past 12 months, Advent has committed over $1.2 billion globally in health care. The firm has also committed over $600 million in four Indian businesses over the same period in varied sectors such as health care, consumer, and financial services.

“We are impressed by ZCL’s differentiated product portfolio, strong pipeline, and its high focus on quality and compliance. The acquisition helps us get closer to our goal of creating top five merchant API platforms in India,” said Pankaj Patwari, director, Advent International India.

Nihar Parikh, executive director, ZCL, said: “We are very pleased with this transaction and excited to partner Advent. In the past 12 years we have established ZCL as one of the leading pure-play API companies in the country, and today marks an important milestone in these efforts. We are excited about the future of ZCL, and believe Advent’s global expertise in the pharmaceutical space, combined with ZCL’s strong capabilities in manufacturing and R&D and a culture of customer centricity, will ensure that we keep up our tradition of delivering immense customer value.”

Advent has been investing in India since 2007.

In this time, it has put in over $1.7 billion in 12 companies with headquarters or operations in the country.

In addition to ZCL, investment in the past 12 months includes RA Chem, a vertically integrated pharmaceutical company; Bharat Serums and Vaccines (BSV), a biopharmaceutical leader in women’s health and critical care; and Aditya Birla Capital, the holding company of the financial services businesses of Aditya Birla Group (ABG), an Indian multinational conglomerate.

Advent has experience in the health care industry globally. In the past 30 years, the firm has invested or committed over $9.6 billion in 48 companies in the sector, including over 20 businesses involved in pharmaceutical R&D, production, and distribution.