12:00 AM
Jun 03, 2013
 |  BioCentury  |  Finance

Seeds to trees

Novo A/S using strong cash flow to invest in mature companies like Xellia

Flush with cash from its existing holdings and not seeing enough worthwhile venture deals to spend it on, Novo A/S has decided to expand its growth equity investments in mature companies. After a proof-of-principle deal done last year showed the approach could provide strong growth, the Danish holding company struck a second deal last month with the acquisition of generics company Xellia Pharmaceuticals A/S.

Xellia develops and manufactures APIs and finished dosage forms of antibacterials and antifungals. Novo agreed to acquire the company from private equity firm 3i Group for about $700 million.

Ulrik Spork, managing partner of Novo Growth Equity fund, said an investment in Chr. Hansen Holding A/S in January 2012 provided a test case that helped to formalize the strategy with the Novo board. Novo acquired a 25.7% stake in the nutritional health and food ingredients company for DKK117 per share, for a total of €560 million ($710.4 million). Since the transaction, Chr. Hansen is up about 79%.

Novo has more than $30 billion under management, the majority of which is tied up in a 25% stake in diabetes company Novo Nordisk A/S. According to Spork, the Novo Nordisk stake, along with other venture and growth equity returns, results in...

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