3i makes a 2.3x return on the sale of Xellia

3i Group plc today said that it along with the funds managed by it, have agreed to sell their stake in specialty pharmaceutical firm Xellia Pharmaceuticals A/S, which is focusing on the development, manufacturing and global commercialisation of anti-infective therapies, to Novo A/S (See: Denmark's Novo A/S acquires Xellia Pharmaceuticals for $700 mn).

The enterprise value of the transaction is approximately $700 million (£460 million).  In sterling terms, the total proceeds to 3i and funds represent a 2.3x money multiple on their original investment of $208 million (£113 million).

Proceeds to 3i Group plc from today's transaction will be c. £143 million, representing a 44% uplift against a value of £99 million at 31 March 2013.

Xellia was established in April 2008 when 3i bought NYSE-listed Alpharma Inc.'s active pharmaceutical ingredients (''API'') business with the objective of transforming Xellia from a supplier of niche APIs into a fully integrated speciality pharmaceutical company.

3i played an active role in strengthening Xellia's Board and senior management, initially with the introduction of non-executive chairman Peter Chambré (previously CEO of Cambridge Antibody Technology).  Working in partnership with Chambré and chief executive officer Carl-Åke Carlsson to develop the strategy and assemble the Board and management team, 3i subsequently introduced Andreas Rummelt (ex-CEO of Sandoz) and Benny Loft (CFO of Novozymes).

During 3i's investment period, Xellia invested more than $100 million in research and development (R&D) and capacity expansion across its global manufacturing network, including a new fill-finish plant in Copenhagen. This investment created a platform for continued growth and enhanced margins, based on a broadened product range and an exciting pipeline of new products.  The Company's focus on R&D, as well as new product filings resulted in 15 new filings in 2012 with up to 17 planned for 2013. 

According to Tomas Ekman, 3i managing director and partner, ''Over the last five years, the 3i team has worked closely with Xellia's excellent management team to build the Company into a market leader and create a well-diversified product portfolio.  It has been a fantastic experience to work with Carl-Åke Carlsson and the management team.''

Carlsson said, "3i's investment and continued support, expertise and commitment has enabled Xellia to successfully grow and transition the business to become leaders in the supply of key anti-infective products.  Now, as we focus on the future and the further development of the business, including the launch of our novel antibiotics pipeline, we look forward to working with Novo and benefitting from their immense experience in the life sciences sector.''