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Hollyport Capital collects 60x return on Sauflon secondaries deal

3 Jul 2014

SauflonPrivate equity secondaries specialist Hollyport Capital has made more than 60-times its initial investment by selling its minority stake in Sauflon Pharmaceuticals in a deal worth about $1.2bn.

The firm bought into the contact lens maker in 2007 by picking up a stake owned by Quester Capital, which had invested six years earlier and gone beyond the lifetime of its limited partnership agreements.

Hollyport forming a dedicated vehicle to buy Quester’s interest in Sauflon and offered the Quester fund investors the option of either taking cash or rolling over into the new vehicle.

Hollyport raised capital from its clients to buy out the exiting fund investors and arranged a new £5m mezzanine loan for the company from Bond Capital Partners to finance new production facilities.

The sale will see Hollyport hit an IRR of more than 80 per cent for the investment.

Hollyport chief executive John Carter said, “The evolution of Sauflon illustrates the difficulties sometimes experienced in achieving long term business growth plans within the constraints of fixed life private equity fund structures.

“We were able to use our experience as a specialist secondary investor to customise an approach which offered both liquidity for original investors whilst also allowing the option of ongoing equity participation.

“Addressing and resolving these shareholder issues facilitated the continued rapid growth of the business, maximising value for all stakeholders.”

AltAssets revealed last December that Hollyport had hit a £75m hard cap final close for its fourth fund.

The firm easily beat its £50m target after just ten months in the market according to Carter, who said the fund received “exceptionally strong” support from existing and new institutional investors.

Hollyport, which was founded in 2006, targets interests in private equity funds as well as direct investments from private equity funds.

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