KKR is all set to acquire Healthium Medtech (formerly Sutures India) from private equity owner Apax Partners for an enterprise value of Rs 7,000 crore ($840 million), said people aware of the matter. This follows a hotly contested race that included a consortium of Mankind Pharma and ChrysCapital, the only other contender. Novo Holdings, the controlling shareholder in Danish drug major Novo Nordisk pulled out last minute as did EQT.
KKR and Apax have signed the binding agreement for the acquisition of Bengaluru based Healthium Medtech and likely to make a formal announcement as early as Monday, the people mentioned above added. Healthium is the largest manufacturer of surgical needles globally by volume.
Moneycontrol was the first to report on Saturday that KKR was the highest bidder for Healthium.
Another contender Mankind-ChrysCapital has offered a price of Rs6500 crore ($780 mn), said sources.
Apax owns 99.8% of the company with the rest 0.2% owned by Anish Bafna, the CEO & MD of Healthium Medtech. Healthium is the fourth largest surgical suture manufacturer in the world with a market share of about 18% in India. Bafna will continue to run the company under KKR.
When contacted, Apax Partners, KKR spokespersons declined to comment.
Earlier in 2022, Healthium Medtech had sold its UK-based subsidiary to KKR for an undisclosed amount. It had sold Watford-based Clinisupplies to KKR Health Care Strategic Growth Fund II.
Sutures India was originally set up in 1992 in Bengaluru by LG Chandrasekhar and S Subramanium, former executives with Smith & Nephew, and Johnson & Johnson.
In FY24, the company posted Rs 820 crore in revenue and Rs 256 crore ebitda. This financial year, revenue is expected to reach Rs 1,020 crore with ebitda at around Rs 350 crore. The transaction then is being done at 20X the current EBITDA multiple of the current fiscal FY25.
Ethicon Inc, from Johnson & Johnson is the current market leader. Arthrex Inc and Covidien Holding Inc are some of the other players in the global surgical sutures market.
Earlier this year, Apax initiated a formal sale process mandating investment bank Jefferies for the proposed deal valuing the company at Rs6500-7000 crore ($850 mn), ET first reported in January.
Two dozen funds including Partners Group, Hillhouse, TA Associates, Carlyle, and Canadian pension funds had picked up the information memorandum after signing non-disclosure agreements, Eventually only two submitted the binding bids
Over the years, several PE investors including InvAscent-led India Life Sciences, CX Partners and TPG Growth have backed the company till TPG Growth took a 73% controlling stake. In 2018, Apax Partners bought out TPG Growth, CX Partners, and founding shareholders, for about Rs 1,950 crore ($300 million).
The Healthium Group has five key product areas – advanced surgery, arthroscopy, urology, wound care and consumables. Healthium products are claimed to have covered over 40,000 surgeons across 18,000 hospitals, reaching 90% of all districts in India.
The company exports its products to over 90 countries including Europe, South America, Africa and Asia. Revenues from the foreign market constituted 45% of its FY2023 revenues while the domestic market contributed to 55% of its total sales.
Healthium has a diversified presence across products and geographies with exports to more than 90 countries. It has technical expertise with an in-house development team, along with a strong sales and distribution channel which continue to aid its revenue growth and market presence, said a January ICRA report.
In August 2021, the company acquired the gelatin sponge business of Sri Gopal Krishna Labs (the AbGel business) as a going concern on a slump sale basis. Later, the company also acquired a 100% equity stake in CareNow Medical Private Limited, which is engaged in the designing, manufacturing, marketing and sale of advanced wound management and infection prevention products.
The domestic surgical sutures market will continue to grow at a compound annual growth rate of over 13 per cent to reach $380 million in 2030, according to GlobalData’s report, ‘India Surgical Sutures Market Share.’ India will account for about 18 percent of the Asia-Pacific (APAC) surgical sutures market, by revenue, in 2023, it said.
Source: Economic Times