Advent International, one of the more active private equity firms in India, has struck its fifth deal in the country this year including a bolt-on acquisition, by entering into a definitive agreement to acquire significant stake in Suven Pharmaceuticals (Suven).
The promoters, Jasti family, own 60% in public listed Suven currently. The company commands a market cap of Rs 12,683 crore ($1.53 billion). Advent is buying 50.1% of Suven in one or more tranches for Rs 6,313 crore ($763 million) in the transaction.
The deal would also trigger a mandatory open offer to acquire additional 26% of the outstanding equity shares of the company from the public shareholders, which could cost Rs 3,276 crore ($396 million) more.
Post the completion of this acquisition, Advent intends to explore the merger of its portfolio company, Cohance Lifesciences with Suven, to build a leading end-to-end CDMO and merchant API player servicing the pharma and specialty chemical markets.
This would further push up Advent’s stake in the merged company.
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.
“We have built a business with industry leading growth & margins. We have cultivated excellent relationships with multiple global innovator companies backed by deep R&D capabilities and demonstrated track record of execution and delivery excellence. Advent is the ideal partner for us, with deep expertise in healthcare, and a global network of professionals and experts,” said Venkateswarlu Jasti, Managing Director at Suven.
“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. We intend to explore a merger of Cohance with Suven in a manner which is synergistic and accretive for Suven’s shareholders.” said Shweta Jalan, Managing Partner and Head of Advent International in India.
Suven, which was demerged from its parent entity, Suven Life Sciences, in 2020, is one of the leaders in the India pharma CDMO space with over 20% CAGR over last four years and high profitability with over 43% EBITDA margin.
Suven does around 90% of its business with innovators and follows the customer from Phase 1 to commercialization. It said it has a strong pipeline of Phase 3 and late Phase 2 molecules with 100+ active projects.
“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.
Advent created Cohance as an active pharmaceutical ingredient (API) and contract development and manufacturing organization (CDMO) platform by bringing under its umbrella three portfolio companies.
The private equity firm, which bought a controlling stake in Indian API maker Avra Labs earlier this year, brought in RA Chem Pharma and ZCL Chemicals along with Avra under the platform.
It has seven manufacturing facilities. Cohance recorded a total proforma revenue of around Rs 1,280 crores (FY22) and has grew at annual rate of over 21% organically in the last two years.
Advent has been investing in India since 2007 and founded its Mumbai office in 2009. Currently, it has invested or 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.
Advent was advised on this transaction by Kotak Investment Banking and Avendus Capital while Suven had Barclays Bank Plc as their exclusive financial advisor.
This is the fourth new deal by Advent in India this year, following its control deal with Avra Labs, a stake in Yes Bank and last week invested $175 million in Bengaluru data science firm Tredence. It has also struck a bolt-on acquisition.