UK groups 3i and HgCapital have completed a lucrative exit from DocMorris, a Dutch-based pharmacy business, selling it to European pharmaceutical giant Celesio.
3i, which has backed the business since its inception in 2001, made an internal rate of return of about 60 percent from the investment, while Hg, which came in for the second funding round in 2004, tripled its money and made almost a 50 percent IRR, according to a deal source.
Terms were not disclosed, but the source said the deal for DocMorris was worth about €200 million. The business had revenues of about €172 million last year, although one source close to the firm said profits were less than €10 million.
DocMorris was started in 2000 with seed capital from Dutch venture firm Neuhaus Partners – which has also exited via the Celesio sale – and 3i, who became the largest shareholder in the business. Hg invested in the business during a second round of fundraising in October 2004.
The Dutch-headquartered business began life as a mail-order business but has since developed its pharmacy business, and now employs 330 people in various countries across Europe. Its primary market is in Germany, where it is a household name.
Celesio is buying the chain as it looks to build a pharmacy chain in Germany. Currently German law prevents this, but new legislation is expected to liberalise the market, allowing companies like Celesio to operate a number of pharmacy outlets in the country.
“DocMorris has established an excellent launch pad for itself ready for the forthcoming deregulation of the German pharmaceutical market,” said Philipp Schwalber, a partner at Hg.
Celesio had also been linked with a possible bid for Alliance Boots, a UK health and beauty chain, which is set to be sold to Kohlberg Kravis Roberts for about £11 billion.