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PE firm Advent International acquires controlling stake in Bharat Serums
3 min read.Updated: 18 Nov 2019, 11:19 PM ISTM. Sriram
The transaction indicates the rising interest of private equity funds to undertake control deals in India
Monday’s deal provides a complete exit to the company’s existing investors — PE firms OrbiMed Advisors Llc and Kotak PE
Mumbai: US private equity (PE) firm Advent International Corp. on Monday said it has acquired a controlling stake in Bharat Serums and Vaccines Ltd, a leading maker of injectable biological and pharmaceutical products. The company operates in women’s healthcare, assisted reproductive treatment, critical care and emergency medicine in India and emerging markets.
While financial details of the deal were not disclosed, Mint had reported first on 9 April that promoters of Bharat Serums were in initial talks with PE firms to sell a controlling stake for around $500 million, and had approached Advent for the same.
Monday’s deal provides a complete exit to the company’s existing investors—PE firms OrbiMed Advisors Llc and Kotak PE. The Daftary family, the promoters of the company, will continue to hold a “meaningful stake", a company statement said, without elaborating.
The company, which has three manufacturing plants in Maharashtra, has its products registered in more than 45 countries. It employs around 1,000 people across locations in India and overseas. Its efforts on new drug discovery and research and development (R&D) in the past few years have met with limited success. It had also formed a joint venture (JV) with drug maker Zydus Cadila to develop cancer drugs. However, the JV ended in 2015 after Zydus Cadila bought over Bharat Serums’ stake in the business.
Bharat Serums competes with Serum Institute of India, which is controlled by the Poonawalla family and is one of the world’s largest manufacturers of vaccines.
The transaction indicates the rising interest of PE funds to undertake control deals in India to ensure that they can drive decisions, strategy and corporate governance in their portfolio companies.
At the same time, Indian promoters have also become more willing to cede control to a financial partner to boost growth.
When Kotak PE invested in the company in 2012, it had a revenue of just ₹80 crore ($12 million), which increased to around ₹700 crore ($100 million) in FY19.
However, the second generation of the family is not too keen to run the business and have been wanting to exit it altogether.
The company has seen a number of PE suitors over the years, including The Carlyle Group, US drug maker Mylan Inc., Baring Private Equity, as well as domestic pharmaceutical company Cadila Healthcare.
Advent has been an active buyout firm in India, most recently acquiring lingerie brand Enamor for ₹320 crore. The deal gave an exit to Enamor’s investors India Alternatives and Faering Capital. Its other acquisitions include Manjushree Technopack Ltd for approximately ₹2,440 crore from promoters Vimal Kedia and PE firm Kedaara Capital Investment Managers Ltd in 2018, and Dixcy Textiles Pvt. Ltd, the south Indian firm that sells innerwear brand Dixcy Scott, in 2017.
In September this year, it also acquired a majority stake in DFM Foods Ltd from its promoters and existing investors, including WestBridge Capital, for about ₹852 crore.
“Drawing on our deep experience in pharmaceuticals and our global platform, we see significant opportunity to further strengthen the company’s leadership position in India, particularly in women’s health, and scale its presence in emerging markets around the world," said Shweta Jalan, managing director and head of India at Advent International.
“Advent’s high level of investment activity in India this year demonstrates the attractiveness of the market and our commitment to investing here. We are thrilled to partner with Advent and continue Bharat Serums and Vaccines’ journey to deliver innovative and specialized products," said Bharat V. Daftary, a member of the founding family of Bharat Serums and Vaccines.
“Our business has demonstrated consistent product innovation and revenue growth, and with this partnership we will seek to further expand our presence in select large emerging markets," he added.