TPG Capital’s stake sale in Healthium Medtech draws interest from 4 firms
Mumbai: At least four entities, including two leading medical devices makers and two private equity (PE) investors, have submitted bids for a majority stake in Bengaluru-based Healthium Medtech Pvt. Ltd (HMPL), two people aware of the development said.
American private equity fund TPG Capital, which holds a 73% stake in the company through TPG Growth, is planning to sell a controlling stake in the medical products maker, earlier known as Sutures India.
Medical devices makers Boston Scientific Corp. of the US and Covidien Medtronic of Ireland, and private equity funds Carlyle and Advent International, have submitted non-binding bids last week, the people cited above said on condition of anonymity.
Johnson and Johnson and B. Braun are also expected to submit bids, the two people said. Mint had reported in July that TPG Growth is set to sell a 20% stake in HMPL for $100 million (about Rs650 crore). A later report in VCCircle said the private equity firm is looking to sell a controlling stake.
“TPG has now decided to sell its entire stake if there is a buyer for an overall valuation of $500 million,” said one of the two people cited earlier.
Besides TPG, domestic private equity fund CX Partners holds a 12% stake, while the rest is held by individual investors. Investment bank Goldman Sachs Group Inc. is advising TPG on the sale. TPG Growth invested in HMPL in 2013 by acquiring a 23% stake from CX Partners and the company’s promoters for Rs145 crore.
HMPL makes surgical and wound-closure products such as natural and synthetic absorbable and non-absorbable sutures, surgical needles, staples, tapes and bone wax.
Apart from Johnson and Johnson, it competes with several domestic manufacturers. The company is also in talks to make a large acquisition overseas, the people cited above added. TPG’s decision to sell its stake in the private market marks a change in its exit strategy. Earlier, multiple reports suggested TPG was planning to tap the public markets.
Accordingly, TPG had appointed merchant bankers to manage the IPO process.
“The IPO plans have been put on hold for the time being, and will largely depend on the new investor coming on board or how the ongoing sale process pans out,” said the first person. “If, for instance, there is a financial investor on board along with TPG retaining a part of its stake, then in all probability, there will be in an IPO in the near future,” the person added.
HMPL was founded by Subramanian Shivaraman and Chandrasekhar Gopalan Latteri in 1992. In 2009, it raised its first round of private equity from Evolvence India Life Sciences Fund.
In 2012, with TPG’s investment in the company, both Chandrasekhar and Shivaraman took an advisory and mentoring role, while the daily operations of the company were passed on to a professional management.
Healthium has made several acquisitions and formed a number of joint ventures in the past few years.
In 2009, it acquired Truskin Gloves Pvt. Ltd. In 2013, it invested in a single joint venture in the Sharjah Airport International Free Zone and Mena Medical Manufacturing to expand its manufacturing presence in West Asia.
Also, in 2016, Sironix Medical Technologies Pvt. Ltd, an Amsterdam-based subsidiary of Healthium, acquired Clinisupplies Ltd and Clinidirect Ltd—a UK-based medical devices company specializing in manufacturing and marketing of products for the primary as well as secondary healthcare sectors. In March, Healthium acquired Delhi-based Quality Needles Pvt. Ltd for Rs450 crore ($70 million) in an all-stock deal. In FY16, Healthium reported a net profit of Rs41.6 crore on an operating income of Rs362.2 crore at the consolidated level, according to its latest corporate filings.