London, 17 August 2012: HgCapital has today announced the sale, for £465 million, of Mercury Pharma, the UK-based speciality pharmaceutical company, to Cinven, the European private equity firm. Following the sale of Mercury Pharma, 20% of invested capital will have been realised by the HgCapital 2009 vintage fund, HgCapital 6.

Since the start of the global economic downturn in Q3 2008, HgCapital has realised a total of 15 investments, returning approximately £1.6 billion in proceeds to clients at a time of economic uncertainty. HgCapital’s 2006 vintage fund, HgCapital 5 has already returned more than 120% of invested capital to date, from only five full and one partial exit including SLV (4.0x original cost, 45% IRR), Visma (4.1x original cost, 34% IRR) and SHL (3.1x original cost, 25% IRR).

Mercury Pharma is a speciality pharmaceutical company focused on the sale of niche prescription off-patent products.  Mercury Pharma’s portfolio is underpinned by strong intellectual property rights with 91% of revenue from owned-IP products. Based in the UK, the company was founded in 1989 and was listed on the London Stock Exchange from 1998–2009. It has 187 employees worldwide, including an operations centre in India and a direct sales presence in the UK, Ireland and the Netherlands.

Mercury Pharma was acquired by funds managed by HgCapital in December 2009 in a complex public to private transaction. The HgCapital Healthcare Team was attracted by the highly flexible, asset-light business model, focused on selling a diverse portfolio of well positioned products.

Since taking Mercury Pharma private, HgCapital has taken an active approach towards building value in the business.  Mercury, under a new management team, quickly refocused on its niche pharmaceutical business, disposing of all the non-core consumer related businesses. Significant investment in the pharmaceutical business has been focussed on building a best in class business development team to drive long term sales growth.  Further investment in improving quality and supply chain effectiveness has helped to drive significant improvements in profit. As a result of these changes Mercury Pharma has nearly doubled EBITDA under HgCapital’s ownership.

Philipp Schwalber, Head of HgCapital’s Healthcare team, said: “Mercury Pharma is the first exit for HgCapital 6, the second realisation by HgCapital’s Healthcare Team in the last two years, and the most recent in a long line of public-to-private success stories for HgCapital. We initially identified the speciality pharmaceutical niche in 2007 and tracked Mercury Pharma for a number of years before launching our public-to-private offer in 2009. The realisation of Mercury Pharma marks the continued development of HgCapital’s investment focus in the healthcare sector, as we continue to seek out businesses that enjoy niches of secular growth despite the challenges facing much of the healthcare space.”

Commenting on the realisation, Lisa Stone, a Partner in HgCapital’s Portfolio Management team, said: “The success of Mercury Pharma is a terrific example of HgCapital’s commitment to building robust, healthy and growing businesses. All the hard work from Philipp and the management team, in refocusing the business and investing in growth, has paid off, enabling us to deliver a great result for clients in a challenging market.”

HgCapital was advised on this transaction by Jefferies International Limited.

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