Mumbai: Buyout private equity fund Advent International has entered into a definitive agreement on Monday to acquire a 50.1% stake in Hyderabad-based
from the Jasti family for ₹6,313 crore paying ₹495 per share, confirming ET’s newsbreak.
The buyout is subject to relevant regulatory approvals and conditions.
Advent will also launch an open offer for an additional 26% of the company, a listed contract research and manufacturing services (CRAMS) business, at the same Rs 495 per share from minority shareholders. If fully subscribed to, Advent could end up paying ₹9,589 crore, making it its largest takeover in India yet.
Advent has been investing in India since 2007. Currently, it has invested/committed over $3.2 billion across 14 companies with headquarters or operations in India in sectors such as business and financial services, retail, consumer and leisure, healthcare, industrial and technology. Previous healthcare investments in India also include Bharat Serums and Vaccines. Globally, Advent has invested over $10.4 billion across 51 companies in healthcare.
Promoters Venkateswarlu Jasti and his family split
in FY20, turning the CRAMS business into a separately listed company via a demerger. The promoters own 60% of the company.
Advent intends to explore the merger of its portfolio company, Cohance Lifesciences with Suven, to build a leading end-to-end CDMO and merchant active pharmaceutical ingredient (API) player servicing the pharma and specialty chemical markets. The merger will be evaluated by the board taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders and will be subject to regulatory approvals and other customary approvals.
The Cohance platform was created last month for its active pharmaceutical ingredient (API) and contract development and manufacturing businesses comprising three portfolio companies — RA Chem Pharma, ZCL Chemicals and Avra Laboratories.
It has seven manufacturing facilities. Cohance recorded a total pro forma revenue of around 1,280 crore (FY 2021-22) and has grown at a market leading above 21% CAGR organically in the last two years.
“This move will benefit the Suven platform immensely. The proposed collaboration with Cohance is a win-win for Suven and its public shareholders. It will help us offer a broader set of services and multi sites to our customers,” said Venkateswarlu Jasti, managing director at Suven Pharmaceuticals.
Suven Pharma, was demerged from its parent entity, Suven Life Sciences, in 2020, and is one of the leaders in the India pharma CDMO space with high growth (>20% CAGR over last 4 years) and profitability (>43% EBITDA margins). Suven does around 90% of its business with innovators and follows the customer from Phase 1 to commercialisation.
It has a strong pipeline of Phase 3 and late Phase 2 molecules with 100+ active projects.
“We believe that Suven is a world class CDMO with a credible track record and a great roster of clientele to its name. We plan to build on Suven’s capabilities and make it one of the global leaders in the CDMO space,” said Shweta Jalan, head of Advent International in India.
ET in its December 23 edition was the first to report that Advent has edged past rival Blackstone’s bid, which was the only other contender in fray. On December 26 edition, ET also broke the news that the deal announcement with Advent was taking place pre-market opening on Monday.
Barclays, Kotak Mahindra Capital and Avendus were the financial advisors of the deal. Shardul Amarchand Mangaldas and Cyril Amarchand Mangaldas are the legal advisors.
On Monday, Suven Pharma shares dropped 5.22% to end the day at Rs 472.20, as several investors were expecting a significant control premium. The stock had already seen an 8% spurt in the last three months in anticipation of a deal.
“Our vision for Suven is to build a $1-billion global leader, by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development, and scaling up manufacturing and R&D. We will also look at acquiring synergistic businesses globally, to further build capabilities and gain new customer access,” said Pankaj Patwari, managing director at Advent International.
In early 2020, the Jasti family appointed Barclays to help it with the demerger and potential sale of a controlling stake in the CRAMS business to focus on the discovery research undertaking involving molecules. Several buyout funds were approached but the process was called off as stock market valuations tanked. It was revived earlier this year.
Suven Pharma has its R&D and manufacturing facilities in Hyderabad and a business development office in New Jersey. A full-fledged biopharmaceutical solutions provider for global pharmaceutical companies, As of March 31, Suven had filed 17 abbreviated new drug applications (ANDAs), of which it got approval for nine products and has launched eight. To step up its formulations business, Suven acquired Hyderabad-based Casper Pharma for Rs 155 crore in April.