San Juan, Puerto Rico-based private equity firm Advent-Morro Equity Partners announced the distribution of $11,194,733 to the investors of the Guayacán Private Equity Fund-II (“GPEF-II” or the “Fund”). This distribution is equivalent to 20.07% of the Fund’s contributed capital.
The proceeds being distributed come from the successful exit of Advent-Morro’s investment in Patheon, a leading global provider of contract development and manufacturing services to the pharmaceutical industry, which had gained a significant presence in Puerto Rico through its acquisition of Puerto Rico-based MOVA Pharmaceutical (“MOVA”). Advent-Morro sold its investment in Patheon on March 17, 2014, at a 3.10x multiple, representing an annualized Internal Rate of Return (“IRR”) of 19.93%.
Advent-Morro’s initial investment of $3.0 million in Patheon was made in April 2007 as part of a $150 million equity investment made alongside JLL Partners (“JLL”)1 to restructure Patheon’s highly leveraged balance sheet that had resulted from the acquisition of MOVA in 2004. Patheon had financed a significant portion of the MOVA acquisition with debt. At the time of the acquisition, MOVA’s Puerto Rico operations represented approximately 60% of Patheon’s U.S. manufacturing capacity (measured in square feet), and over 60% of the Company’s U.S.- based labor force.
Following the acquisition, MOVA’s volume of business deteriorated, causing a significant decline in earnings, which resulted in Patheon defaulting on its debt obligations. Such default put the Company, and specifically its Puerto Rico operations, at risk and generated significant losses for Patheon. The $150 million equity investment made in April 2007 by Advent-Morro and JLL, allowed Patheon to restructure its balance sheet, repay credit facilities, and, most importantly, continue normal operations under new management.
“The ability to restructure the Company, turn around its Puerto Rico operations and exit this investment with a significant return marks an important milestone in Puerto Rico’s pharmaceutical contract manufacturing industry and highlights our home field advantage of having known and believed in the local MOVA operations”, said Cyril Meduña, Advent-Morro’s Founder and Managing Partner.
Advent-Morro Equity Partners, has been managing private equity investment funds in Puerto Rico since 1989, and is Puerto Rico’s leading private equity investment firm with over 50 portfolio investments since its inception, and more than $120 million under management.