Gresham achieves 12x money on £67m exit of Penn Pharmaceuticals

Gresham Private Equity, the UK mid market private equity specialist, today announces that it has exited Penn Pharmaceuticals (“Penn”) through the sale of the business to LDC in a deal worth £67m. The deal has generated a return on investment of 12x.

Penn is a drug delivery business providing fully integrated pharmaceutical services. Based in Tredegar, south Wales, the business tests, develops and manufactures products for companies including an international range of customers.

Gresham originally backed the £12m management buy-out in September 2000 and de-merged Penn into two separate businesses – Penn Pharmaceutical Holdings Ltd and Penn T Ltd both to improve the operational effectiveness of the businesses and to facilitate the sale in October 2004 of the Penn T business to Celgene, the leading US oncology business. Following this sale, Gresham worked with Penn to restructure its core business and develop its presence in international markets. This was acknowledged with Penn being granted the Queens Award for Export.

With Gresham’s support, Craig Rennie and the management team have transformed Penn from being a contract manufacturer to a highly regarded international brand achieved through substantial investment to improve the infrastructure, quality of service and the quality of its client base. Both growth and profitability at Penn are well in excess of averages for the sector with turnover increasing fivefold since 1999 and profits increasing more than tenfold.

The creation of such a world class business is a notable success for the south Wales economy given Penn’s location in a former coal mining area where other large blue chip companies have recently down-sized. Employee numbers have doubled from 100 to 200 people.

Craig Rennie, Chief Executive of Penn comments: “Some people have a bad opinion of venture capital but I have had nothing but support and tremendous contribution from Gresham. Their input has enabled us to transform Penn into the business it is today. It has been a great experience but it is now time to transition the business to the management team. I wish them well in taking the business forward to an even higher level.”

Simon Inchley, Managing Director of Gresham adds: “We are privileged to have been involved with Craig Rennie and the Penn management team since our original acquisition of the business in September 2000. Through this partnership with management, the business has been transformed into a strong international trade brand with an excellent infrastructure enhanced by the creation of 100 new jobs in the south Wales economy. The resultant high quality business has now been transitioned and we wish the team well in taking the business on and exploiting the growth platform created.”