BackStrides promoters look to exit
Investment bank Moelis & Co. has been appointed to seek interest from prospective buyers for the promoter stakeStrides’ promoters, serial pharma entrepreneur Arun Kumar, and his partner KR Ravishankar and others own 29.69% in the company
PremiumMumbai: After having sold off their animal health focused pharma company SeQuent Scientific Ltd earlier this year to private equity firm Carlyle, the promoters of Strides Pharma Science Ltd are now back on the deal street, this time looking to exit their 30% stake in Strides, said two people aware of the development.
Investment bank Moelis & Co. has been appointed to seek interest from prospective buyers for the promoter stake, they said.
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“It’s early days. Moelis has been appointed and they have started reaching out to bulge bracket private equity funds to check interest," said the first person cited above, requesting anonymity.
Strides’ promoters, serial pharma entrepreneur Arun Kumar, and his partner KR Ravishankar and others own 29.69% in the company. At current market price, this stake is worth almost ₹2,200 crore.
“We do not comment on market speculation as a matter of policy," said a spokesperson for Strides Pharma Science Ltd.
An email sent to Moelis & Co. did not elicit a response.
“The pharma sector is seeing a very strong interest from financial investors and promoters are seeing it as a good time to unlock value. Already we have seen many buyout deals and more such deals are in the works," said the second person cited above, also requesting anonymity.
KKR’s $414 million acquisition of JB Chemicals and Pharmaceuticals Ltd was the most high profile buyout deal this year.
Mint reported on 23 October that the promoters of Suven Pharmaceuticals Ltd have hired investment bank Barclays to find a buyer for their 60% stake; Granules India Ltd’s promoters are working with Kotak Mahindra Capital to find suitors; and ZCL Chemicals Ltd has appointed Jefferies for a stake sale.
The spate of buyout deals in the sector is being driven by the convergence of several macro trends
“Due to covid related disruption in supply chains, companies, both foreign and domestic, are rethinking the risks in the supply chain. They are moving to derisk their China-dependent supply chains and move at least some of it to India," said the second person cited above.
“So, there is an increased interest from PE funds and that is manifesting itself in more reach-out from these funds to the promoters," he said.
Earlier in May, Kumar and Ravishankar sold a controlling stake in animal health focused pharmaceutical company SeQuent Scientific Ltd to american private equity firm Carlyle for Rs1,580 crore. SeQuent is a pure-play animal healthcare company with global operations and provides active pharmaceutical ingredients (APIs), formulations, and analytical services in over 100 countries, and manufacturing operations in India, Spain, Turkey, Germany and Brazil.
According to a 14 September report by brokerage JM Financial, multiple factors will drive medium term growth prospects for Strides Pharma.
“Strides is expected to continue on its high growth trajectory in US. Strides remains on track to launch 8 products (including 5 products from its portfolio of yet-to-be commercialized ANDAs) in US in FY21," it said.
The brokerage added that growth in other regulated markets is expected to be driven by market share gains in key markets (UK, Germany, Nordics and Netherlands), new product launches and increased supplies to Arrotex (Australia) with a significant part of the incremental R&D spend being directed towards these markets.
“The emerging markets and institutional businesses have now turned the corner with the African branded business having stabilized," it added.
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