ICICI Ventures invests Rs 19.7 crore in Arch Commerz

ICICI Venture has concluded its first mezzanine investment from its Rs 750 crore India Advantage Fund by investing Rs 19.7 crore in Arch Commerz, a public limited company engaged in the manufacture of pharmaceutical intermediates.

Brescon Corporate Advisors Ltd was the advisors to Arch Commerz for the transaction. Arch Commerz's steady growth over the past three years coupled with strong product pipeline makes it an ideal candidate for mezzanine funding, ICICI Ventures managing director and chief executive officer Renuka Ramnath said.

ICICI Venture s infusion into Arch Commerz Company is structured as a mix of subordinated debentures and warrants.

The structure is closely linked to the overall returns to the performance of the company. Swiss Technology Venture Capital Fund, a private equity fund sponsored by the Swiss Federal government, has invested Rs 9 crore in October 2003 to strengthen the equity base of Arch Commerz.

Ramnath said mezzanine funding presents a unique funding opportunity for companies that are adequately leveraged and are seeking financing alternatives that do not result in significant dilution for existing shareholders.

According to Ajit Kamath, the CEO and key promoter of Arch Commerz, the investments of ICICI Ventures and Swiss Tec would help the company augment its production capacity taking the company to a turnover of Rs 150 crore by 2005.