Companies | The Finnish company received EUR 300 million in funding

From Espoo of laboratory studies ie in vitro Medix Biochemica, which makes raw materials for diagnostics, has received 300 million euros in new growth funding.

What makes the financing special is that the new capital did not come from ordinary capital investors.

The funding was raised by the company’s principal owner, Devco Partners, and was raised solely for Medix Biochemica’s existing investment structure. The ownership of the company remains with Devco.

“We have collected a total of more than 600 million euros in long-term capital from domestic and international investors for Medix Biochemica. Ownership will still remain with Devco”, says the founding partner of Devco and responsible for the Medix Biochemica investment Teemu Alahuhta.

He wants to challenge the view that it would not be possible to get growth financing for Finnish growth companies without giving up domestic ownership.

“The best Finnish companies often escape to a certain size category after reaching abroad, because there are no alternatives. We would like to be one solution to this problem.”

Medix Biochemica is a company founded in 1985 by the Minerva Foundation, which finances medical research, focused on laboratory tests and the raw materials needed for them.

So-called monoclonal antibodies became its special area of ​​expertise.

They are of cloned cell lines antibodies produced in bioreactors, which are used, among other things, in many kinds of laboratory tests. Many so-called biological medicines and some corona vaccines are also based on monoclonal antibodies.

However, Medix Biochemica only specializes in substances needed for diagnostics.

The outputs of bioreactors are very valuable. The price per kilo can be tens of millions of euros or even more. But antibodies are typically needed in very, very small amounts in tests.

Medix Ten years ago, Biochemica’s growth threatened to stall because the Minerva Foundation had no opportunities to finance wider internationalization and growth. Therefore, the majority of the company was sold six years ago to Devco Partners.

Devco was founded ten years ago by Teemu AlahuhtaLauri Stadigh and Otto Kukkonen. Still, the company has only invested in three companies.

“We have a different approach than traditional venture capitalists. We strive to build leading players in their respective fields by focusing on a limited number of companies, offering each company its own team to support them, and committing to their long-term development,” says Alahuhta.

Under Devco’s ownership, Medix Biochemica has almost quadrupled its turnover to around 70 million euros. The growth has come from both acquisitions and the growth of the old business.

Acquisitions through the operation has expanded to the United States and Central Europe. There is also a unit in China. The product selection has also expanded to, for example, raw materials for molecular tests.

Chairman of the Board by Ann-Christine Sundell according to Medix’s products are in some way involved in almost all kinds of diagnostic tests in the world.

“They ensure that the test produces the correct result.”

There are a total of around 250 employees, almost half of which are in Finland.

New the capital was collected from a number of domestic and international investors. Included are, among others, the family-based investment company Council Ring Capital from Chicago, Coller Capital, Antti Herlinin the family’s investment company Security Trading and Finnish pension companies.

There are already other Finnish family investment companies as investors. So far, seven companies have been connected to Medix Biochemica through acquisitions. Companies in the field are typically quite small players.

The 300 million euros collected now will be more than enough for the next acquisitions.

At some point, however, the company will be separated. Alahuhta still can’t say at what stage or how it will happen.

Devco’s typical target is
at least 15 years of ownership in its companies, i.e. significantly longer than conventional private equity investors. There would still be more than half of the time left.

“Listing on the stock exchange is certainly one option. But for now we will focus on the development of the company and remain the owner. There are still many opportunities to grow in this sector, both organically and through acquisitions.”

Medix Biochemica Sundell, who has been the chairman of the board since 2011, has a long international experience in the diagnostics industry.

“Many great companies have ended up abroad. We also received purchase offers all the time. Selling would have been easy,” he says.

Finland’s second specialist in monoclonal antibodies, Hytest, ended up on a different path. In 2018, the Turku-based company’s founders sold the majority to the Norwegian private equity investor Summa Equity.

It sold the company just three years later for 545 million euros to the Chinese Mindray.

“It is important that companies’ headquarters remain in Finland. Strategic, international business expertise is developed in the head offices. There is a shortage of that in Finland,” says Sundell.

According to Sundell, maintaining versatile medical expertise and ability is also a matter of security of supply.

Devcon other investment targets are Bluefors, which makes, among other things, coolers used in quantum computers, and Vexve, which makes valves that work in demanding conditions for industry.

Devco is looking for investment targets for medium-sized companies operating in a special field that have the potential to be world leaders in their field.

EUR 260 million of capital has already been collected for the next target. The target is still being searched.

In general, how many experts in their own field are there in Finland that Devco is looking for, who are of a suitable size as purchase targets?

“There aren’t too many of them, but at least several dozen, maybe around a hundred,” Alahuhta says.