Advent International on Monday agreed to acquire 50.1% of Suven Pharmaceuticals Ltd from the Jasti family, promoters of the company, for ₹6,313 crore, as part of the private equity firm’s plan to create a contract drug manufacturing powerhouse in India.
Advent will make an offer to purchase an additional 26% of Suven’s shares from public shareholders to comply with the Securities and Exchange Board of India’s (Sebi’s) takeover rules. The promoter stake sale and open offer are both priced at ₹495 per share. The open offer, if fully subscribed, will see Advent spend ₹3,276 crore to acquire those shares.
On Monday, shares of Suven Pharma fell 4.65% to ₹473 on the NSE. Suven Pharma promoters held a 60% stake in the company as of 30 September.
Suven Pharma, which was demerged from parent entity Suven Life Sciences in 2020, is engaged in contract development and manufacturing of pharma products. The company has seen annual growth of 21% in the past four years and has a strong pipeline of phase 3 and late phase 2 molecules with over 100 active projects, Advent said in a press statement.
“We find the contract drug development and manufacturing space very exciting. We believe this is a space which plays to the strength of India in terms of pharma manufacturing. We are also seeing China-plus-one playing out across sectors. Suven sits in the centre of this, both from a pharma standpoint as well as speciality chemicals standpoint,” Shweta Jalan, managing partner and head of Advent International in India, said in an interview.
“Suven is a very high-quality contract development and manufacturing player. It has a strong pipeline, good innovator relationships and it has a strong revenue track record. We believe we can execute on the existing pipeline, and we can certainly turbo-charge the business development within the company and continue to grow the company through synergistic acquisitions both locally and globally,” added Jalan. Kotak Investment Banking and Avendus Capital advised Advent on the transaction, while Suven Pharma was advised by Barclays Bank Plc.
After the acquisition is done, Advent intends to explore the merger of its portfolio firm, Cohance Lifesciences, with Suven, to build an end-to-end contract development and manufacturing organization (CDMO) and merchant API (active pharmaceutical ingredient) platform servicing the pharma and speciality chemical markets. The merger will be evaluated by the board, taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders and will be subject to regulatory approvals and other customary approvals, Advent said.
Cohance was formed in November to create a new brand identity for its CDMO and API platform, bringing together three Advent portfolio firms—RA Chem Pharma, ZCL Chemicals and Avra Laboratories.
It has seven manufacturing facilities. Cohance recorded a total revenue of Rs1,280 crore in FY22 and has grown at 21% annually in the past two years.
“Our idea is to make it the No. 3 CDMO and API player in the country if you combine both entities. We believe this platform will address three large end markets – the CDMO pharma market, the speciality chemicals market and the API market. What we see in the combination is that we can double the innovator relationships, and it allows Suven to play across the end-to-end lifecycle of innovators. Cohance has invested in a fair bit of capacity, and we could expand and use that capacity to offer that to Suven’s clients,” Jalan said.
