Healthium pivots from IPO to sale, as big funds circle

Healthium manufactures absorbable and non-absorbable sutures, mesh, tapes, skin staplers, ligation clips and other medical consumables such as surgical gloves, tubular bandages and catheters. (Istockphoto)
Healthium manufactures absorbable and non-absorbable sutures, mesh, tapes, skin staplers, ligation clips and other medical consumables such as surgical gloves, tubular bandages and catheters. (Istockphoto)

Summary

  • The Apax Partners-owned company, earlier called Sutures India, has appointed investment bank Jefferies to run the process.

MUMBAI : Leading investors, including General Atlantic, ChrysCapital and Carlyle, are looking to acquire medical sutures maker Healthium Medtech Ltd, three people aware of the development said.

The Apax Partners-owned company, earlier called Sutures India, has appointed investment bank Jefferies to run the process, the people said on the condition of anonymity, adding a deal may value the business at $750-850 million.

The sale plans come after Healthium’s plans for a public issue did not take off. In November 2021, the company secured approval from the Securities Exchange Board of India for a 1,500 crore initial public offering. The approval expired in 2022 and the company did not refile its papers.

“The idea is to sell the company through a 100% stake sale," the first person said, adding global and domestic private equity funds along with their limited partners are looking at the acquisition.

“It is very early days. The deal is still a long shot," the second person added.

In June 2018, Apax had acquired close to 100% stake from the then existing shareholders including TPG Growth, CX Partners and founding shareholders for around 1,950 crore. TPG Growth owned around 73% while CX Partners held a 12% stake in the firm at that time.

“The current ask pegs the valuation at more than 3.5X the price paid by Apax," the third person said, adding the company has done well and is among the world’s largest medical sutures manufacturers globally, with less than a quarter of the total market share. In 2022-23, Healthium sold its UK business specializing in urology to global private equity (PE) fund KKR for 762.4 crore.

Spokespersons for Jefferies, Carlyle and General Atlantic declined to comment. Emailed queries to Apax and ChrysCapital remained unanswered.

Founded in 1992, Healthium manufactures absorbable and non-absorbable sutures, mesh, tapes, skin staplers, ligation clips and other medical consumables such as surgical gloves, tubular bandages and catheters. The company exports its products to over 90 countries in Europe, South America, Africa and Asia. It has a network of around 80 international distributors selling its products. Almost half of its revenues come from the domestic market where it is present in more than 700 districts and over 450 cities across India.

According to a 31 January report by ratings agency Icra Ltd, Healthium, on a consolidated basis (excluding the discontinued UK business), recorded a revenue growth of 14.3% to 728.5 crore in 2022-23 from 637.1 crore in 2021-22, supported by healthy demand from key end-user industry segments for wound closure, both in the domestic and export markets.

“Revenue growth was majorly supported by volume growth on the back of strong distribution network in the domestic markets, new product launches and established relationships with existing clients. The operating margin of the company improved to 28.4% in 2022-23 from 23% in 2021-22 on the back of favourable product mix with increased revenue contribution from the high-margin wound closure segment, sale of the UK business that had relatively lower margins, enhanced backward integration for sutures by improving the cost efficiency of needles manufacturing facility and healthy operating leverage," Icra said.

The company generated a revenue of around 394 crore with operating margin of 27.6% during the first half of 2023-24 (April-September 2023), the Icra report showed.

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