Kedaara, Khazanah frontrunners for stake in Sutures India2 min read . Updated: 08 Apr 2016, 04:02 AM IST
CX Partners has been in discussions with various funds to sell its 20% stake in Sutures India
Mumbai: Domestic private equity fund Kedaara Capital and Malaysian sovereign wealth fund Khazanah Nasional Bhd have emerged as likely buyers for a minority stake in surgical equipment maker Sutures India Pvt. Ltd, said two people familiar with the development.
The deal size is expected to be around ₹ 400 crore, they said.
US-based private equity fund TPG Growth owns 52% in Sutures and CX Partners holds 20%, while the rest is held by the promoters.
CX Partners has been in discussions with various funds to sell its stake in Sutures India. The enterprise value of Sutures is $300 million (around ₹ 2,000 crore) and investment bank O3 Capital is advising CX Partners, said the first person.
When contacted, Jayanta Kumar Basu, managing partner at CX Partners, and Deepesh Garg, managing director, O3 Capital, declined to comment.
Emails sent to spokespersons at Khazanah, Sutures India and Kedaara Capital went unanswered.
Founded in 1992, Bengaluru-based Sutures makes surgical and wound-closure products such as natural and synthetic absorbable and non-absorbable sutures, surgical needles, staples, tapes, bone wax, surgical meshes, catheters and disposable surgical gloves.
Sutures, which competes with multinational firms such as Smith and Nephew Plc, Ethicon Inc. and ConvaTec in the surgical equipment segment, exports products to 91 countries in Europe, South America, Africa and Asia. It also supplies to over 10,000 hospitals across India.
TPG Growth, a growth equity fund of TPG Capital, invested in Sutures in 2013 by acquiring about a 23% stake from CX Partners and promoters of the firm for ₹ 145 crore. Over time, TPG increased its stake and it now holds a majority stake in Sutures.
There has been a spurt in private equity exits from the healthcare sector through secondary transactions (one PE to another) and initial public offers (IPOs) over the past few months.
Last year saw PE firms exit investments worth $1 billion in the healthcare sector compared to $500 million in 2014. Exit volumes also increased to 29 deals from 18 deals in 2014, according to a January Bain & Company report, Trends in PE/VC investing in India: 2015.
“Healthcare has always attracted PE investors, and post the IPO of Dr Lal Pathlabs Ltd, Narayana Hrudayalaya Ltd and HealthCare Global Enterprises Ltd (HCG), PE investors have seen good exits on their healthcare investments. A large market, along with rising income, and under-investment on public healthcare makes (the) private healthcare businesses very attractive for PEs," said Ajay Garg, managing director of Equirus Capital, a boutique investment bank.
The healthcare delivery system in India requires an investment of around $245 billion through traditional means to meet its target, said PricewaterhouseCoopers’s January 2015 report, The Future of India: The Winning Leap.
India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years, the report said.