Global private equity funds, including Bain Capital, KKR, and Advent International, are in talks for a controlling stake in Sai Life Sciences at a valuation of $600-700 million, three people aware of the development said. Sai Life Sciences (SLS) is a Hyderabad-based pharmaceutical contract research and development, and manufacturing (CRDMO) firm.
PE firm TPG Capital, which had invested about $135 million ( ₹900 crore) in 2018, currently owns 43.4% stake in the company. Both TPG and its current promoter Krishna Kanumuri may sell stakes as part of the transaction.
The first round of bids came in November, and the three funds are in further discussions. “KKR, Advent, and Bain are carrying out due diligence, and are likely to submit final binding bids next month,” the first person cited above said.
Spokespersons for Sai Life Sciences, Bain Capital and KKR did not respond to emailed queries on Thursday. Those for TPG and Advent International declined to comment.
Founded in 1999, Sai Life Sciences acquired Prasad Drugs Ltd in 2005, and Merrifield Pharma in 2006. The company has significant presence in regulated markets such as the US, Europe and the UK, where around 90% of its FY22 revenues came from, a February 2023 release from rating agency India Ratings shows.
SLS offers integrated services across the pharmaceutical life cycle from discovery services to development and manufacturing of new chemical formulations for global innovator pharmaceutical and biotechnology companies, the India Ratings report added.
“SLS has a strong track record of working on over 100 molecules across different phases of the molecular life cycle. It has a diversified customer base and provides its services to seven out of the top 10 global pharmaceutical companies as well as several biotechnology companies,” it said.
In the nine months of FY23, the company added over 20 new clients under the discovery and contract manufacturing business. It had 12.9% adjusted Ebitda margin (excluding one-time expense) in 10MFY23.
Consolidated revenue grew at a CAGR of 14% y-o-y in FY22 to ₹870 crore, driven by higher traction in the discovery services business. In 10MFY23, the revenue stood at ₹930 crore, an India Ratings report said.
Indian CRDMOs have seen a remarkable transformation, evolving from regional service providers to international leaders in pharmaceutical development and manufacturing, a November 2023 report by EY-Parthenon Group said.
“CRDMOs in India are investing in expanding capacities and extending capabilities to offer one-stop-shop from ‘concept to commercialization’ spanning generics to complex formulations, biologics, and even next-gen modalities,” the EY-Parthenon report said.
PE funds, especially global ones, are keen to invest in such businesses. Advent International’s acquisition of Suven Pharma in 2022 through its platform Cohance Lifesciences is one such example.