Advent International to buy majority stake in ZCL Chemicals

Marking its fourth investment in India, global private equity investor Advent International has signed an agreement to acquire a majority stake in pharmaceutical firm ZCL Chemicals Ltd (formerly known as Zandu Chemicals Ltd).

While the financial terms of the transaction were not disclosed, sources close to the development said Advent International will buy a 51 per cent stake in ZCL at an enterprise value of ₹1,700 crore. Following the deal, existing investor Morgan Stanley Private Equity Asia ((MSPEA) – which had earlier made a minority investment – will completely exit the company.

In 2016, MSPEA had acquired a 20 per cent stake in ZCL Chemicals for ₹170 crore.

“ZCL will be our third pharmaceuticals investment in India and the second in the Active Pharmaceutical Ingredients 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,” Shweta Jalan, Managing Director and Head of India at Advent International, India, said.

ZCL Chemicals was advised by Jefferies (financial advisor), Bombay Law Chambers (legal counsel) and Deloitte (finance and tax). The transaction is subject to customary closing conditions. Mumbai-headquartered ZCL is a manufacturer of specialty APIs and advanced intermediates.

“We are impressed with ZCL’s differentiated product portfolio, 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.

Advent has been investing in India since 2007. Since then, the PE firm has deployed over $1.7 billion in 12 companies with headquarters or operations in the country.

In addition to ZCL, new investments in last 12 months include RA Chem Ltd (pharmaceutical company), Bharat Serums and Vaccines (a biopharmaceutical firm) and Aditya Birla Capital (an Aditya Birla Group company) among others.

Over the last 12 months, Advent has committed over $1.2 billion globally across the healthcare sector. The firm has also committed over $600 million in four Indian businesses over the same period in varied sectors such as healthcare, consumer and financial services.