Ashmore Alchemy takes haircut on over 8-year-old India pharma bet

 Ashmore Alchemy takes haircut on over 8-year-old India pharma bet

A private equity fund managed by Ashmore Alchemy has exited Zim Laboratories Ltd, likely booking a loss as the Indian company could not scale significantly or retain investor interest after going public three years ago.

The Ashmore Alchemy fund had invested around Rs 45 crore ($8.2 million) in Zim in October 2012, The Capital Quest has learnt. At the time, the company was listed on the OTC Exchange. The company is believed to have raised the money to expand its manufacturing capacities.

The deal was routed through AA Development Capital India Fund 1 LLC, an $80 million fund which was a joint venture between Alchemy Partners LLP and Ashmore Investments of the UK.

The PE firm sold its entire 22% stake for about Rs 30 crore ($4 million) on Monday.

Zim, which is more than three decades old, provides drug delivery solutions. It had revenue of around Rs 180 crore with a net profit of close to Rs 17 crore in the full year prior to attracting the PE investment.

The company listed on the BSE in 2018. I clocked revenue of Rs 307 crore with a net profit of Rs 7.3 crore for the year ended March 2021. While its revenue has grown, its profit fell and it failed to attract institutional investors’ interest to the buoy the stock. The shares haven’t managed to touch the peak of 2018.

An email query to Ashmore Alchemy on the exit did not elicit a response till the time of publishing this report.

The PE firm had previously backed gold loan retailer Manappuram Finance, packaging products maker Barflex Polyfilms and apparel maker Numero Uno through the same fund.

Vivek Sinha

The Capital Quest