Mandarin Capital achieves 3x return on Euticals exit
Mandarin Capital Partners has sold more than half of its stake in Italian pharmaceutical ingredient maker Euticals, netting a return of three times of its initial investment - a record for Chinese private equity outbound investment.
The stake was sold to Italian private equity fund Clessidra, Reuters reported. Following the transaction, Mandarin's holding in Euticals has fallen to 24% from 54%, giving the pharma company an enterprise value of more than EUR300 million ($403 million).
Mandarin Capital bought a controlling stake in Euticals in December 2008 and has helped the company build partnerships with both Chinese and European companies through four acquisitions.
The Sino-Italian private equity firm will retain management control of the company after the transaction and continue to support its growth, including the creation of a production base in China. A stock market listing either in China or overseas, is also a priority.
Gao Zhen, managing partner of Mandarin Capital, said that the Euticals transaction is a good example of the company's strategy to help portfolio companies expand in Chinese and European markets through mergers and acquisitions.
The private equity firm counts China Development Bank (CDB), the Export-Import Bank of China and Italian bank Intesa SanPaolo among its investors.
Chinese outbound investment has gathered pace in recent years, with CDB heavily involved. When the China-Africa Development Fund was launched in 2006 with a remit to support Chinese companies moving into Africa, first phase funding of $1 billion was provided by CBD. The fund eventually closed at $5 billion.
CDB also collaborated with Israeli conglomerate IDB to create Infinity Group, an Israel-based cross-border private equity specialist that has raised several domestic and offshore funds, and made a string of investments.
Earlier this month, China rolled out a RMB50 billion ($8 billion) fund in Shanghai to aid overseas acquisitions by Chinese companies. The vehicle, known as Sailing Capital International, is the largest international renminbi-denominated vehicle ever created. It has already raised RMB12 billion.
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