American Capital has sold its portfolio company SPL Acquisition, parent company to Scientific Protein Laboratories , to Shenzhen Hepalink Pharmaceutical Co.
Scientific Protein Laboratories (SPL) is a manufacturer and supplier of active pharmaceutical ingredients with a focus on pancreatic enzymes and heparin. SPL specializes in cGMP (Current Good Manufacturing Practice) biopharmaceutical manufacturing and is one of the largest commercial suppliers of Heparin Sodium USP, Pancreatin USP and Pancrelipase USP (USP refers to the US Pharmacopeial Convention, a scientific nonprofit organization that sets standards for the identity, strength, quality, and purity of medicines, food ingredients, and dietary supplements manufactured, distributed and consumed worldwide). SPL serves the pharmaceutical, veterinary and food industries globally and is headquartered near Madison in Waunakee, WI (www.spl-pharma.com).
American Capital first invested in SPL in August 2006. At that time, American Capital’s investment took the form of a revolving credit facility, a senior term loan, a senior second lien loan, senior and junior subordinated debt and equity.
American Capital and its affiliated funds received $291 million in debt and equity proceeds, including escrows and expected tax refunds, and realized a gain of $59 million from the transaction, subject to post-closing adjustments. Of the total proceeds, American Capital received $210 million in debt and equity proceeds, including escrows and expected tax refunds, realizing a gain of $33 million from the transaction, subject to post-closing adjustments.
American Capital also recognized $33 million of dividend income over the life of its investment. In addition to the proceeds received at closing, there are contingent earn-out payments in the amount of $211 million, which may be paid to American Capital and its affiliated funds upon SPL achieving specified milestones. American Capital’s compounded annual rate of return earned on its debt and equity securities over the life of its investment was 15%, including interest, realized gains and fees.
“The success of the SPL investment is a result of its strong management team, leading market position and commitment to the safety and quality of its products,” said Kyle Bradford, American Capital Managing Director, Healthcare Group. “We are proud of the company’s improvements and success over our investment period, which made it an attractive purchase for Hepalink.”
Shenzhen Hepalink Pharmaceutical Co. is one of the largest suppliers of heparin sodium in the world. The company is headquartered in Shenzhen, China (www.hepalink.com/en).
“American Capital was able to contribute significantly to SPL’s growth and success over the last few years,” said Will Fletcher, American Capital Senior Associate. “By using the resources of our investment, operations, legal and other staff teams, we helped SPL complete a notable acquisition, navigate through changing market conditions and resolve significant product quality challenges.”
American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $93 billion in total assets under management and has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (www.AmericanCapital.com).
“For more than seven years, American Capital partnered with us as we grew our business, developed new products and supported our valued customers,” said Robert Mills, SPL Chief Executive Officer. “American Capital’s deep appreciation for SPL, our employees and customers and its understanding of our unique industry, products and complex regulatory requirements proved instrumental to SPL’s success.”
© 2014 PEPD • Private Equity’s Leading News Magazine • 4-21-14
