US-based private equity fund CVC Capital is now the frontrunner to acquire Sajjan India Ltd, one of the country’s largest agrochemical makers, having signed an exclusivity pact with the promoters and outbidding the other prime contender, Bain Capital.
Multiple people aware of the development told ET that the deal is likely to value Sajjan India between ₹7,100 and ₹7,300 crore ($1 bn). ET first reported in July that Madhav Prasad Aggarwal, the promoter of Sajjan India Ltd, is exploring the option to sell a controlling stake in the family-driven entity and had hired investment bank JP Morgan for the deal.
Gujarat-based Sajjan is a contract manufacturer of active ingredients (agro), electronic chemicals, specialty chemicals and intermediates, having applications across agrochemicals, pharmaceuticals and dyestuff.
Other contenders that participated in the first round of talks include bulge-bracket PE funds KKR, PAG, Advent, Temasek and Carlyle.
“Both sides have entered into a deal exclusivity for bilateral negotiations before a formal announcement is made before the end of next month,” one of the people cited above told ET.
Sajjan India and CVC officials declined to comment.
Sajjan India has an estimated revenue of ₹1,400 crore and an operating profit (EBITDA) of ₹560 crore for FY22, said one of the sources. It reported net sales of about ₹900 crore in FY20, with an EBITDA of ₹315 crore.
Founded in 1975, Sajjan India diversified into chemicals in 1983 with the manufacturing of dye intermediates and textile auxiliaries for the export market. In 1985, a tie-up with Hoechst AG was established for supplying dye intermediates. In 1997, Sajjan India consolidated its operations at the current site in Ankleshwar and further diversified into manufacturing of agrochemical intermediates in 2001.
In 2003, Sajjan India ventured into manufacturing customer patented products under technology transfer agreements.
If the deal were to materialise, it would be the third acquisition of CVC Capital in India. CVC manages $114 billion of assets across the world, and it made two acquisitions in India – cancer care chain Healthcare Global Enterprises and legal services firm UnitedLex BPO. Established in 1981, CVC’s private equity platform manages $86.6 billion of assets.
Aceso Company Pte. Ltd, the investment arm of CVC Capital, holds about 54% stake in Healthcare Global Enterprises, which has a market capitalization of ₹3,025 crore. CVC acquired UnitedLex in 2018 for $200 million in its debut deal.
In Asia, CVC currently invests from Asia V, a $3-billion fundraised in 2020.
