A consortium of Carlyle and Zydus Cadila is competing with private equity group Advent International to acquire Mumbai-based bio-pharmaceutical company Bharat Serums and Vaccines Ltd. (BSV). The two have submitted non-binding offers in the range of Rs 3,450-3,600 crore ($500-520 million), said multiple sources aware of the matter.
They are up against domestic pharma companies Dr Reddy’s Labs, Chrys Capital-backed Mankind Pharma and Goldman Sachs which have also made offers in the range of Rs 3,000 crore ($400-440 million), said one of the persons cited above.
The binding offers are due this month end.
However, the overall process has been slow due to the valuation mismatch. The founder promoters, the Daftary family, is believed to expecting a valuation of $600-630 million (Rs 4,000-4,300 crore) for their company. The Daftary family, existing investors Kotak Private Equity and Orbimed Asia are looking to sell a majority stake in the company and had mandated investment bank Jefferies to manage the sale process, ET had first reported in August last year.
The two funds together hold 23% stake and the rest is with the founders. As part of giving an exit to the investors, the company had planned Rs 2,000-crore initial public offering two years ago, which was called off later.
The company was valued at Rs 6,667 crore then, ET had reported in December 2017. If the deal goes through, Daftary would like to keep about 35-40% in BSV as he doesn’t want to exit the company, said the second person.
After the buyout of Heinz India, it’s for the second time that Pankaj Patel-led Zydus Group is on the prowl and is exploring to work with a PE partner. Zydus Wellness – a Zydus group company – had acquired Heinz India’s consumer wellness business, which includes popular brands Complan and Glucon D. For the Rs 4,595-crore buyout, Zydus received backing of homegrown PE fund True North, which invested about Rs 1,000 crore ($140 million).
Carlyle is trying its luck for BSV for the second time as the fund alone explored acquisition in 2014, which didn’t materialise. Carlyle’s India healthcare portfolio include multi-speciality hospital chain Medanta-The Medicity and diagnostics major Metropolis Healthcare.
BSV, which has 900 employees, sells products in India and in over 45 countries. They include 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.
BSV competes with Serum Institute of India, Biological E, Panacea Biotec and Shantha Biotechnics in India. The company’s revenue was Rs 620 crore in FY17, with a profit of Rs 40 crore. Latest financial details are not yet available.
Emails sent to BSV managing director Gautam Daftary and the spokespersons of Orbimed, Zydus Cadila, DRL, Carlyle and Kotak PE did not elicit any response till press-time. Goldman Sachs spokesperson declined to comment, so did Advent and Mankind spokespersons.
Zydus Cadila roped in BSV as a joint venture partner in 2015 to develop anti-cancer agents.
Source: Economic Times