Early stage venture capital firm, Fulcrum Venture India, has recently announced an investment of Rs 21.82 crores in pharmaceutical company, Shield Healthcare Pvt Ltd within the branded formulations space. As part of the deal structure Fulcrum will hold a
Early stage venture capital firm, Fulcrum Venture India, has recently announced an investment of Rs 21.82 crores in pharmaceutical company, Shield Healthcare Pvt Ltd within the branded formulations space. As part of the deal structure Fulcrum will hold a 40 per cent stake on a fully diluted basis in Shield Healthcare.
In a press release issued by the VC firm, Shield Healthcare will use the proceeds to fund its business geographically and vertically integrate a manufacturing unit. As an integral part of this deal, Krishna Ramanathan, Founder-Partner, Fulcrum Venture India will join the board of directors of the company.
Commenting on the occasion, Ramanathan said, “Fulcrum Venture India is happy to partner with Shield Healthcare under the leadership of L .Mahadevan and looks forward to the company scaling up over the next 5 to 7 years under his leadership. Fulcrum expects Shield revenue to increase significantly over the coming year, thereafter growing exponentially to Rs 100 cr by 2016 yielding an EBIDTA in the range of 26 – 30 per cent according to pharma industry standards. We also consider the valuation attractive given Fulcrum’s deep domain knowledge in the formulations business.”
Shield with a top line of Rs 24 cr, in FY 2012, moved into expansion mode recently to enlarge its southern and eastern presence into a pan Indian one. The company will close at a top line of Rs 31 cr, in FY 2013.
To realize its expansion plans Shield decided to launch a manufacturing unit, where in Fulcrum saw as a golden investment opportunity. It estimates the factory and SBU will break even in the next 2 years, while the overall company is cash flow positive. Fulcrum believes that further investment into geographical expansion would turn positive cash-flow sooner, the release stated.
The release further said that Fulcrum Ventures focuses on promising start ups and SMEs in a variety of sectors such as Pharma, Niche Retail, Consumer Durables, Education, IT & Technology and it continues to identify, fund and manage, promising investment opportunities and facilitate growth in the neglected SME sector.