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PE fund Advent to acquire majority stake in ZCL Chemicals; Morgan Stanley PE to exit via deal –

Private equity fund Advent International on February 8 announced that it has signed a definitive agreement to acquire a majority stake in ZCL Chemicals, formerly known as Zandu Chemicals. The transaction represents the third deal in the domestic pharma segment by Advent which has earlier acquired Hyderabad based RA Chem and Bharat Serums and Vaccines.

With this transaction, Morgan Stanley Private Equity Asia, a private equity platform that previously managed a minority investment in ZCL, will exit its investment, the announcement said. The financial terms of the deal were not disclosed.

On August 21, 2020, Moneycontrol was the first to report that Morgan Stanley PE was looking to exit the firm and that the promoters, the Parikh family, may also evaluate an exit depending on valuations.

“ZCL will be our third pharmaceuticals investment in India and the second in the API space.  ZCL 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, a Managing Director and Head of India at Advent International, India.

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

“ZCL was one of MSPEA’s first investments in the Healthcare and Life Sciences sector in India, and we are happy with the progress the company has made in the last 4 years. Today, it is well-positioned to embark on the next phase of growth, with a strong product portfolio and focus on quality standards”, said Nirav Mehta, Managing Director and Co-Head of Morgan Stanley Private Equity India.

ZCL operates in the segments of specialty active pharmaceutical ingredients (APIs) and advanced intermediates. It’s a highly specialised approach focuses on niche therapeutic areas, underpinned by complex chemistry, supported by a state-of-the-art U.S. Food and Drug Administration (FDA) approved facility, along with strong research & development capabilities.

The firm is developing a strong pipeline of high potential products that are expected to drive the next phase of its growth.

Advent has been investing in India since 2007. In this time, it has deployed over $1.7 billion in 12 companies with headquarters or operations in the country. The PE fund has significant experience in the healthcare 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.

The transaction will be subject to customary closing conditions. ZCL Chemicals was advised by Jefferies (Sole Financial Advisor), Bombay Law Chambers (Legal Counsel) and Deloitte (Finance and Tax). Advent was advised by law firm Khaitan & co and EY.