3i maintains exit momentum with 2.3x pharma return

The London-listed firm has recorded its eighth exit this year with the secondary sale of Xellia Pharmaceuticals.

3i has 
a 2.3x return
on pharma

3i Group is continuing to take advantage of buoyant markets, having agreed its eighth exit this year with the  £460 million (€544 million, $701 million) sale of Xellia Pharmaceuticals to Danish venture capital firm Novo A/S. 

The sale will generate a 2.3x return on the original investment, according to a statement. Proceeds to 3i will be £143 million, which represents an uplift of 44 percent against a value of £99 million at 31 March 2013. 

3i established Xellia in April 2008 when it bought NYSE-listed alpharma Inc’s pharmaceutical active ingredients business. It planned to build Xellia from a supplier into a pharmaceutical company. Under 3i’s ownership, Xellia invested more than $100 million in research and development and capacity expansion across its manufacturing network. It also supported the construction of a new factory in Copenhagen.  

The firm has been steadily exiting a number of portfolio companies this year. Last week, it sold HTC Sweden to Polaris Private Equity for approximately £40 million. Earlier this month it sold IT provider Civica to OMERS Private Equity. It has also sold insurance intermediary group Hyperion, UK restaurant chain Giraffe, Canadian manufacturer Most-Masters, German engineering business Norma Group and Enterprise, a UK provider of infrastructure related services this year. 

During a conference call following the firm’s annual result statement last week, 3i’s chief executive Simon Borrows said 3i generated £565 million from private equity, with an uplift of 49 percent over book value and a money multiple of 2.1x. He said it had been “an excellent year for realisations”, but blamed “pretty fruity” prices for the firm’s lack of investment activity. 

3i reduced its debt by 44 percent in its last financial year, after successfully cutting more than £50 million in costs as part of its ongoing restructuring efforts, 28 percent ahead of the firm’s target.