Private equity firm Bain Capital has acquired Hyderabad-based Porus Laboratories as part of its strategy to expand its portfolio of investments in the specialty chemicals sector. Financial details of the deal were not disclosed.
Mint first reported on 30 March that several PE firms including Bain, CVC Capital, and Advent International were vying for Porus. Mint again reported on 11 May that Bain was leading the race for Porus, having signed an exclusivity pact with the company’s promoters. A potential deal was estimated at ₹2,500-3,000 crore ($302-363 million) at the time, the report said.
The completion of the transaction is contingent upon securing necessary approvals from relevant authorities, according to a statement from Bain.
Rishi Mandawat, a partner at Bain Capital, said the firm intends to leverage Porus’ capabilities to create a platform in the specialty chemicals contract development and manufacturing sector.
“We believe in the industry’s growth prospects and recognize potential to expand the company’s market presence by developing or acquiring chemical capabilities in key sectors,” he said.
Founded by N. Purushothama Rao in 1994, Porus operates in specialty polymers, electronic chemicals and agrochemicals, among other segments.
“We are confident in our ability to unlock the full potential of our market-leading position through this transformative partnership with Bain Capital by leveraging their extensive industry expertise and global network,” Srinivasan Namala, chief executive at Porus said, commenting on the transaction.
In FY22, Porus posted net sales of ₹806.7 crore, a 19% rise from ₹678.4 crore in FY21. Earnings before interest, taxes, depreciation and amortization (Ebitda) rose 97% to ₹241.6 crore from ₹122.9 crore during the period.
Bain isn’t new to the global specialty chemical business. It is already an investor in specialty chemical producers such as Lonza AG and Italmach Chemicals.
The Indian chemical industry has been attracting heightened investor attention in recent years.
In February 2022, CVC Capital acquired Sajjan India for over ₹7,000 crore. Canada Pension Plan Investment Board also participated in the deal.
Meanwhile, Advent International has been actively establishing a platform for pharmaceuticals and specialty chemicals through Cohance Lifesciences. As part of this initiative, Advent acquired three companies—RA Chem, ZCL Chemicals, and Avra Labs.
Furthermore, in January, US water technology provider Xylem Inc. agreed to acquire Evoqua Water Technologies Corp. in a $7.5 billion deal. Evoqua provides water treatment services, including chemicals.
Consulting firm KPMG said in a November 2022 report that the specialty chemical sector in India is crucial for driving the economy. It currently contributes about 7% to the country’s GDP and is projected to reach $304 billion by 2025, a sharp rise from $178 billion in 2021.
“The industry continues to remain an attractive hub for opportunities for both domestic and multinational manufacturers. The speciality chemicals segment comprises a significant portion of India’s chemical industry,” according to KPMG.