Hamburg-based EVOTEC Biosystems in March raised DM45 million (ecu 23 million) through a private placement, the largest private equity financing to date for a biotechnology company in Germany.
The German office of HSBC Private Equity co-led the funding, investing DM15 million alongside two other new institutional investors, the co-leader Deutsche Bank and Hamburger Sparkasse, and existing shareholders.
EVOTEC was founded in 1993 as a spin-out from Quiagen. Prior to the placing, the company was funded by its founders, other private investors and TVM Techno Venture Management. EVOTEC’s managers invested DM12 million in the company during the start-up phase and together with other private investors form the largest shareholder group. TVM is the second-largest shareholder in EVOTEC, and HSBC Private Equity the third.
EVOTEC has advanced with the development of a revolutionary ultra-high throughput drug screening technology. The proceeds of this funding round will allow the company to complete the development and progress its proprietary drug discovery projects. EVOTEC is currently expanding its highly qualified workforce, currently numbering around 110, at the rate of one new employee per week and will continue doing so over the next two years. The company intends to seek an IPO next year.
Since HSBC Private Equity is generally associated with buyouts rather than early-stage investments, EVOTEC is an uncharacteristic deal for the group. It is not, however, the firm’s first biotech investment, as John Harper of the German investment team points out: HSBC Private Equity was one of the early backers of Celltech in the UK. Discussing the EVOTEC investment, John Harper said: “After much investigation, we decided that the potential demand for EVOTEC’s products and services could be huge; we regard this as a high risk, high reward deal”.