Private equity group Advent International has emerged as the sole contender for acquiring Mumbai-based biopharma company Bharat Serums and Vaccines (BSV) with a bid worth Rs 3,600 crore ($520 million) after rival contenders backed out of the two-year-long sale process, industry officials close to the development told ET.
Valuation mismatches, however, may turn out to be a deal-breaker and founding promoters may try and raise funds to buy back shares held by existing private equity investors, providing them an exit route, said one of the people cited above.
Kotak PE and OrbiMed together hold 23% stake in BSV. The rest of the stake is with the Daftary family.
Founded by Vinod G Daftary in 1971, BSV is currently run by his sons Bharat Daftary (chairman & MD) and Gautam Daftary, who is the managing director.
“The promoters will initiate talks with lenders and use some internal accruals to buy back the stake,” one of the persons cited above said. “The idea is to sell the business at a higher price later,” he added.
The founders had earlier planned a Rs 2,000 crore initial public offering two years ago, but the exercise was called off later. BSV was valued at Rs 6,667 crore then, ET reported in December 2017. Subsequently, they had mandated Jefferies to launch a formal sale process for a controlling stake.
Others competing with Advent included a consortium of Carlyle & Zydus Cadila and ChrysCapitalbacked Mankind Pharma, ET had reported on April 22.
Emails sent to BSV managing director Gautam Daftary and the spokespersons of Advent and Orbimed did not elicit any response. Kotak PE denied “the rumour” in its response to ET’s queries.
BSV competes with Serum Institute of India, Biological E, Panacea Biotec and Shantha Biotechnics in India, and employs 900 people. It sells its products in India and in more than 45 countries.
The product range includes plasma derivatives, hormones, equine anti-toxins and serums, antifungals, anaesthetics, cardiovascular and diagnostic products. BSV, with R&D facilities in India, Germany and the US, has company-owned and joint venture-based plants in Ambernath, Ahmedabad and Aachen, Germany.
The company’s revenue was Rs 705 crore in FY18 against Rs 620 crore in FY17, with a profit of Rs 74 crore, up from Rs 40 crore. Total debt decreased to Rs 124 crore in FY18 from Rs 154 crore. There were growth projection- and revenue-related queries raised during the due diligence stage and hence a lot of interested bidders walked away, said one of the persons cited above.
Kotak PE invested in the company from its second fund in 2012. For Orbimed, investment in Bharat Serum in 2010 was its second deal in the country and the investment has run its course. The fund life is now coming to a close and hence the need to exit.
India’s biotechnology sector, growing at 20%, was at $11.6 billion in 2017, with the biopharma sector accounting for 65% of total revenue.
Source: Economic Times