Verdane realises investment in Kappa Bioscience, after seeing EBITDA quadruple during three-year hold
Verdane, the European specialist growth equity investor, has announced the realisation of its investment in Kappa Bioscience (“Kappa”) a leading science-based producer of specialty vitamin K2 for the human nutrition industry, to Balchem Corporation (NASDAQ:BCPC), a global specialty ingredients company focused on nutrition and health. Kappa has seen revenues more than double and EBITDA quadruple during Verdane’s ownership, and the company is now a global market-leading producer of vitamin K2 for the food supplements market.
Vitamin K2 is a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic performance. Primarily, vitamin K2 supports the transport and distribution of calcium in the body. Vitamin K2 is important at all life stages, from pregnancy and early life to healthy aging. Kappa’s K2VITAL® branded vitamin K2 is the leading synthetic vitamin K2 and is backed by strong intellectual property and a deep clinical research portfolio. Kappa has seen rapid growth over the past ten years and is today a global leader in K2 manufacturing, with a strong European and US platform.
Verdane invested in Kappa in 2019, after having followed the company since 2009. The investment hypothesis was based on three core pillars: a) the vitamin K2 market is a structural growth market that will continue to grow fast; b) Kappa would be able to retain global leadership in the niche; and c) the strength of Kappa’s IP, know-how and cost leadership would ensure continued strong margins.
Post investment, Verdane has worked closely with the company to develop and accelerate the growth of the business, strengthening Kappa’s leadership in key areas, including marketing and operations, and supporting its organisation and subsequent commercial breakthrough in the US market. Verdane has drawn on its deep experience in establishing US operations for European businesses, and enabled Kappa to benefit from Verdane’s ecosystem and expertise in areas such as digital marketing and sustainability.
Bjarne Kveim Lie, Co-Founder & Managing Partner at Verdane, said: “We are thrilled and impressed by what the team at Kappa has been able to achieve during our partnership. To grow at such pace with such high quality, while also expanding geographical footprint and constructing a new advanced manufacturing facility for the years to come, is no small feat. We have worked closely with the company through this critical phase of its growth journey, and we are proud of our joint achievements. Balchem is a great strategic fit for the company, and I am confident Kappa will continue to succeed during new ownership.”
Egil Greve, Kappa Bioscience President & CEO, said: “The past three years have been transformative for Kappa, and we are proud and grateful to have partnered with Verdane, who had a different approach to most other PE houses in supporting our business. Their in-house operational experts provided strategic and operational support on high priority projects to elevate performance and help our growth. We are excited to join Balchem, a market leader in human nutrition and health and a science-driven company that aligns well with our vision to improve the quality of life for all. It has been a pleasure to work alongside the Verdane team, and we would like to thank them for their support since 2019.’’
Verdane’s realisation of Kappa is the third in Edda I, following the realisations of HYMA and Scanmarket.
Balchem is acquiring Kappa for an enterprise value of NOK 3.175B (approximately USD 338M). This transaction represents an EV/EBITDA multiple of 18x based on the 2022 forecast EBITDA. Kappa’s forecast 2022 revenues are approximately NOK 500M (approximately USD 53M) with a strong growth and margin profile.
The transaction closing is subject to the completion of customary closing conditions.