Mid-market private equity firm Kainos Capital has sold InterHealth Nutraceuticals, which makes dietary supplement ingredients, to Swiss chemicals and biotechnology company Lonza for $300 million.
The sale comes as Kainos, a 2013 spin-out by the food and consumer team at Texan buyout house HM Capital Partners, gears up for its second fundraising following the success of its debut fund.
According to a recent SEC filing the firm is targeting $750 million for its second vehicle, Kainos Capital Partners II. The target raise is a $300 million step-up from its debut fund which closed on $450 million in November 2013, above its $400 million target.
Investors in that fund included the Canada Pension Plan Investment Board, which invested $138 million, and the Dallas Police and Fire Pension System, which invested $35 million. Areport by the DPFP said that Kainos’ first fund had recorded an internal rate of return of 26 percent.
Kainos acquired InterHealth in November 2013 and embarked on a buy-and-build strategy which saw it acquire three businesses in the dietary supplement space, including Next Pharmaceuticals, a raw material supplier it bolted on in May.
InterHealth makes around 15 branded ingredients. Its biggest selling ingredient is UC-II which is added to products to improve joint health. Lonza said the purchase price represents around 10 times InterHealth’s EBITDA for the twelve months ending July 2016.
Other Kainos portfolio companies include the weight-loss brand Slim-Fast, which it acquired from Unilever in July 2014.