3i sells Cascade stake

3i has exited its investment in pharmaceutical manufacturer Cascade Biochem through the sale of the company to Johnson Matthey. The initial purchase price of GBP2.75 million may be adjusted up to a maximum of GBP8 million, depending on the subsequent performance of the company.

The investor committed GBP1 million to the company in 1997 and a further GBP1.7 million of growth capital the following year. 3i also introduced John Burke as chairman of the company. Cascade used the capital to expand its business and facilities, which include a new purpose built product development and manufacturing facility in Cork, Ireland. The FDA approved the Cork facility in May 2001 for the production of non-sterile active pharmaceutical ingredients. Cascade also has R&D laboratories in Reading.

Cascade manufactures prostaglandins and other complex molecules that are used by the pharmaceutical industry. Prostaglandins have a variety of applications in cardiovascular, ophthalmic and gastrointestinal medicine. Headquartered in the UK, the acquirer Johnson Matthey, is a speciality chemicals company focussed on precious metals, catalysts and fine chemicals.

Despite the generally difficult exit market 3i has maintained a steady stream of realisation’s through trade sales and secondary buyouts. The company’s total realisation proceeds for the six months to end of September were GBP619 million, generating net realised profits of GBP118 million over opening valuation.