Colombia’s Procaps Debuted on Nasdaq Through a SPAC

Bogota, Colombia — Procaps Group, an integrated international healthcare and pharmaceutical company, and Union Acquisition Corp. II, a publicly traded special purpose company, completed a sought-after business partnership to trade the Colombian company’s common stocks and warrants on the Nasdaq Global Market as “PROC” and “PROCW” respectively.

Procaps’ current management team, which includes founder, chairman and CEO Ruben Minski, will continue to lead Procaps Group and President Camilo Camacho and Global CFO Patricio Vargas will help lead Procaps Group’s organic growth strategy in its B2B and B2C segments, while the vision and experience of M&A Committee Chairman Alejandro Weinstein will support Procaps Group’s inorganic growth strategy, particularly in Latin America.

This transaction values Procaps at approximately US$1.1 billion with approximately US$160 million in gross cash proceeds. The proceeds are expected to fund organic growth through capacity expansion, plant upgrades, working capital investments, e-Health platform enhancements and R&D spending, as well as inorganic growth through accretive acquisitions.

Overall net proceeds available to Procaps Group have increased as a result of IFC agreeing to reduce the amount of proceeds used to redeem its shares from a previously anticipated redemption amount of US$60 million to US$45 million.

“We believe today’s milestone combined with our strong first half 2021 financial results will help accelerate the delivery of our innovative pharmaceutical solutions and drive new expansion initiatives that we believe will enable us to take a significant share of the approximately US$58 billion pharmaceutical markets in Latin America,” said Ruben Minski, founder, chairman, and chief executive officer of Procaps.

“Procaps is today one of the fastest-growing companies in Latin America by product sales revenue with 19% year-over-year market penetration growth in the 13 markets in which we operate and cumulative growth of 50% in the Colombian market. We are at an inflection point and the US$160 million in new capital now positions us to execute a multi-pronged growth strategy that we expect will generate double-digit growth in our core markets with strong bottom-line cash generation.

“This transaction, which is valued at approximately (USD) $1.3 billion, exemplifies the wealth and diversity of investment opportunities in Latin America, and can serve as a model for other companies in the region looking to access the U.S. capital markets outside of the traditional IPO process,” said Arnaldo Rego Jr., mergers and acquisitions and capital markets counsel at Greenberg Traurig, the U.S. firm that acted as transaction counsel for Procaps Group.

“In addition, this business combination will further enable our significant focus on a strategy of strategic consolidation and consolidation in the region that we believe will drive accelerated competitive positioning and value creation. Combined with our increased new product launches, continued product rollout in new geographies and measured improvements in our inventory turns, we are confident that we can achieve our overall growth objectives. In this next phase of our development, we expect to see growth in both our existing portfolio and our product pipeline, with an estimated 600+ product launches over the next three years. In addition, our global expansion strategy and growth into new markets remains one of our primary focuses, with continued efforts to expand our successful product footprint outside of Colombia.

Kyle P. Bransfield, CEO of Union Acquisition Corp. ll added, “We congratulate Procaps on today’s achievement and look forward to its continued evolution as one of the most important players within the Latin American pharmaceutical market. We are confident that Procaps will provide shareholders with a diversified investment alternative that supports today’s healthcare needs and achieves this using a sustainable footprint that we believe will deliver long-term value. We look forward to working with Procaps Group as they strategically position the company to achieve their growth objectives.”

Procaps has a presence in 13 countries and product reach in 50 markets, modernizing oral drug delivery technology and manufacturing capabilities.

LTM’s adjusted EBITDA for the period ended June 30, 2021, was approximately US$97 million, representing LTM’s adjusted EBITDA margin of approximately 26%.

Net debt to LTM adjusted EBITDA ratio of approximately 2.2x for the first half of 2021.

Procaps generated net revenues of US$331 million and adjusted EBITDA of US$85 million in 2020 and is on track to achieve approximately US$400 million in net revenues and US$105 million in adjusted EBITDA in 2021.

Approximately 44% of Procaps’ gross revenues in 2020 were dollar-denominated.

BTG Pactual accompanied the transaction to list the Procaps company on the Nasdaq Stock Market by being the sole placement agent in the PIPE and financial advisor to LATN, in the merger between Procaps Group and LATN.

This transaction is the first PIPE with third-party resources, independent of the SPAC executed in Latin America, as part of a merger with a Special Purpose Acquisition Company (SPAC) and the first Colombian company to be listed in the stock market in nearly 10 years.

A SPAC is created for the sole purpose of raising funds through its IPO (Initial Public Offering) in order to acquire and merge with a private company. The PIPE provides additional capital to a SPAC seeking to finance its business combination, rather than raising additional capitalization from traditional sources.