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Sunday, 22 June 2014 22:00

Public pension fund leads $9.8M investment in Grand River Aseptic Manufacturing

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Grand Rapids-based Grand River Aseptic Manufacturing secured a $9.8 million investment led by the Michigan-based Municipal Employees’ Retirement System that will help the company ramp up for two new contracts. Grand Rapids-based Grand River Aseptic Manufacturing secured a $9.8 million investment led by the Michigan-based Municipal Employees’ Retirement System that will help the company ramp up for two new contracts. COURTESY PHOTO

A $9.8 million investment that included money from a pension fund for Michigan public employees should provide the growth capital that Grand River Aseptic Manufacturing Inc. needs to fund expansion for two new large client contracts.

The capital infusion — led by the Municipal Employees’ Retirement System — enables the Grand Rapids-based Grand River Aseptic Manufacturing to prepare for future growth through a facility expansion, purchase new equipment and hire additional staff, said President Tom Ross.

“The contracts are fantastic. It’s something we’ve been working toward,” Ross said. “The future looks great.”

Through the two large contracts, Grand River Aseptic could double revenues in 2014 and likely do it again in 2015, Ross said. The capital investment provides the company further validation and “is a strong indicator that we’re headed in the right direction.”

Grand River Aseptic produces sterilized injectable drugs under contract for pharmaceutical companies and has primarily focused on producing small batches of drugs used in clinical trials. With the new contracts, the company is moving into commercial production as a contract manufacturer, said John Kerschen, managing director of The Charter Group, a major investor in Grand River Aseptic.

Venturing into commercial production represents a significant growth opportunity for Grand River Aseptic, although producing drugs for clinical trials will remain a “significant part of the business mix,” Kerschen said. The company hopes to leverage the new contracts into additional business, both with those two clients as well as with new customers.

“There are expectations that if we do good work, there’ll be more opportunity,” Kerschen said.

The Charter Group led a group of investors in late 2010 that injected $5 million in capital and acquired a majority stake in Grand River Aseptic, which was founded years earlier by the Van Andel Institute and Grand Valley State University but struggled in its early years. In 2013, the group made a subsequent $2 million investment in the company, which operates a production facility southwest of downtown Grand Rapids and recently opened a second facility.

The Municipal Employees’ Retirement System, or MERS, made the largest investment in the company in the recent capital raise, which included private investors from Michigan and Indiana. The capital infusion includes $7.5 million in equity investments. The rest came through debt, Kerschen said.

The Charter Group, co-led by Kerschen, provided investment banking services for the fundraising effort and acted as registered securities agents of M&A Securities Group.

MERS ranks among the 200 largest pension funds in the U.S. and had nearly $8.8 billion in total assets at the end of 2013 and more than 100,000 enrolled participants. In 2013, the pension fund generated a net investment return of 14.75 percent and grew assets by about $1 billion, according to an annual financial report issued this month.

The pension fund is “proud to be investing in Michigan’s renaissance,” said Chief Investment Officer Jeb Burns. “[Grand River Aseptic Manufacturing] represents a unique opportunity right here at home — world-class talent, a blue-chip roster of customers and advanced manufacturing that will lead our state’s economy.”

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Editor’s Note: This story was changed from its original version which incorrectly stated that Michigan Accelerator Fund invested in Grand River Aseptic Manufacturing. Rather, The Charter Group – whose principals also manage the Michigan Accelerator Fund – was the lead investor in the company. 

Read 4236 times Last modified on Monday, 23 June 2014 10:12
Mark Sanchez

Senior Writer

msanchez@mibiz.com

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