Advent sees profit on Argentine drug exit

Boston-based Advent International has sold its stake in Argentine generic pharmaceuticals maker Fada Pharma, earning a positive return on the investment despite the volatile Argentine macro environment.

Global buyout firm Advent International has sold its holdings in Argentina’s Fada Pharma SA, a manufacturer of generic pharmaceuticals, to Polygon Labs. Terms of the sale were not disclosed, but according to Juan Pablo Zucchini, a director based in Advent’s Buenos Aires office, the buyout firm recorded a positive return on the Fada investment.

Zucchini said in a company statement, “We have been very pleased with Fada’s progress and its ability to grow and stay profitable during the [Argentine] economic crisis. Thanks to its outstanding management team, the company has emerged from a difficult period with a higher revenue base, expanded product portfolio and greater market share.”

Fada’s revenues grew 61 percent over the last three years, recording $25 million in 2005.

Zucchini added that Advent’s strategy for growing Fada through the ups and downs of Argentina’s macroeconomic environment involved a three-pronged approach. Advent emphasised professionalising what was a family-run business at the time of acquisition, diversifying Fada’s business to include not only the company’s historical focus on injectable products but also solid pills, and increasing exports to new markets including Colombia, Brazil, Asia and Russia. While exports had represented roughly 4 percent of Fada’s revenues at the time of Advent’s acquisition, exports represented 15 percent of company revenues in 2005.

Advent acquired its stake in the then-family run Fada in 2001, and received interest from a number of potential buyers before ultimately deciding to sell its holding to Polygon, a pharmaceuticals manufacturer which is owned by the Weinstein and Said families and a group of Latin American investors.

With the sale of Fada, Advent has now exited three out of its four investments in Argentina, with private courier services company OCA as Advent’s sole remaining holding in Argentina. Through its Latin American Private Equity Fund III, which made a final close on $375 million in September 2005, Advent is in the process of acquiring Uruguay’s Nuevo Banco Comercial, which will be managed primarily from the buyout firm’s Buenos Aires office.