InvestorQ : Why has the Parikh family exited its stake in Zandu Chemicals?
prachi Patwardhan made post

Why has the Parikh family exited its stake in Zandu Chemicals?

sara Kunju answered.
8 months ago

The Parikh family has confirmed that it had sold its entire stake in ZCL Chemicals, formerly known as Zandu Chemicals, to private equity firm Advent International. The deal was done at an enterprise value of Rs.2,000 crore. While the Parikh family held 80% stake in ZCL the balance 20% stake was held by Morgan Stanley Private Equity Fund. Both Morgan Stanley Private Equity and Parikh family have sold their stakes to Advent, which gets 100%.

The Parikh family sold its 80% stake for Rs.1,610 crore. There is an interesting observation about the kind of returns that the Parikh family has made. For example, the Parikh family bought the stake in ZCL Chemicals in 2008 at total valuation of Rs.12.5 crore. The same stake is being sold in 2021 at a valuation of Rs.2,000 crore, which means the company has created 160 times value accretion in a span of 12 years. Clearly, a reason to exit!

Morgan Stanley PE also be selling its 20% stake in ZCL Chemicals to Advent International for a sum of Rs.390 crore. Morgan had acquired this stake in 2016 for Rs.150 crore, so they rae also making a decent return of around 160% in a span of 5 years. ZCL is a niche high growth player in the pharmaceutical API space. The big valuation boost for the company comes from the fact that it is a zero debt company.