Direct Capital acquires 51 per cent of New Zealand Pharmaceuticals

By Helen Schuller
Friday, 25 November, 2005

New Zealand based VC Direct Capital has acquired a shareholding of 51 per cent in New Zealand Pharmaceuticals (NZP), which produces specialty chemicals for pharmaceutical and biotechnology companies.

"The acquisition is part of a transition process for the company in the lead-up to public listing of NZP, which we are targeting within the next three years," said NZP managing director Richard Garland. "Direct Capital and the board will determine if we list on the ASX or the NZX."

Direct Capital's investment has been completed from its DCPIII and Pohutukawa private equity funds and from BioPacificVentures (BPV).

The remaining 49 per cent of NZP will continue to be owned by the management and staff of NZP and strategic investor Shin Nippon Yakugyo, a Japanese specialty chemicals business.

NZP manufactures pharmaceutical intermediates and diagnostics and produces a range of ingredients used in dietary supplements. The company's lead product, cholic acid, is manufactured from bovine bile and is an intermediate for a drug used to treat liver related diseases. Other animal based products include taurine, an amino acid used in infant formula, heparin, a blood anticoagulant and ferritin, a natural iron supplement.

One of NZP's more recent product initiatives is ManNAc, the first of what NZP hopes will be a number of synthetic compounds produced for the manufacture of glycotherapeutic drugs. NZP's role in this area has developed from its relationship with Industrial Research, which is developing a range of these specialty carbohydrates. Financing for Direct Capital's acquisition includes the capital expenditure funding required by NZP to build a new factory to manufacture glycotherapeutic intermediates. Construction is scheduled for 2006 on the site of the existing head office and manufacturing plant in Linton near Palmerston North.

Direct Capital's Tony Batterton and Howard Moore will join management representatives on the NZP board and a new independent chairman will also be appointed shortly.

Although financial details of the acquisition are undisclosed, according to Garland NZP has an enterprise value approaching NZ$100 million (AUD$94 million).

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