Transaction:
- Private equity player Advent International has entered into a definitive agreement to acquire significant stake in Suven Pharmaceuticals from the Jasti family.
- Advent will also be making an open offer to acquire additional 26% (entailing a total outgo of Rs. 3,276.25 Crore if fully subscribed) of the outstanding equity shares of the company from the public shareholders.
- Post the completion of the acquisition, Advent intends to explore the merger of its portfolio company, Cohance Lifesciences with Suven.
About Suven Pharma:
- Incorporated in 1989, Suven Pharma is a pharma company focused on CDMO (Contract development and manufacturing organization) with market value of company around Rs 6,300 Crore.
- In 2020, Suven Pharma was demerged from its parent entity Suven Life Sciences. The undertaking consists of all buildings, plant & machinery and various Licenses approvals etc. along with employees were transitioned to resulting company (Suven Pharma Limited).
- Suven has high growth with CAGR of 20% in last four years and EBITDA margin of over 43 per cent.
- Company does 90% of its business with innovators following the customer from Phase 1 to commercialization and has strong pipeline of phase 3 and late phase 2 molecules with 100+ active projects.
About Advent & Cohance Lifesciences:
- Established in 1984, Advent International is a Private Equity fund active in India since 2007. It has investments of around $3.2 billion in 14 companies with headquarters or operations in India.
Rationale:
- Advent intends to explore merger of Suven Pharma and Cohance Life sciences to create one of the leading CDMO + API powerhouse subject to board and regulatory approvals.
- Advent created wholly owned Cohance Lifesciences in November 2022 and merged three portfolio companies RA Chem pharma, ZCL chemicals and Avra Laboratories to create a new brand identity for its CDMO and API platform.
- Cohance Lifesciences already has seven manufacturing facilities and recorded revenue of Rs. 1280 Crore in FY22. Its divisions cater to development and manufacturing of pharma and specialty chemical innovators and leading global generic companies with complex product requirements.
- The PE fund wishes to build a $1 billion global leader through the acquisition by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development, and scaling up manufacturing and R&D.
- Advent International has been active in deal space and earlier acquired RA pharma Chem in Oct 2020, ZCL chemicals in March 2021 and Avra laboratories in April 2022.
- PAG, CX partners and Samara Capital have also created an API platform where they have made acquisitions like Anjan drugs and Optimus drugs.
Acknowledgements: RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)