Kotak Private Equity Group (KPEG), part of financial services firm Kotak Mahindra, and MPM Capital, the US-based global investment management firm focused solely on healthcare investing, are learnt to be in talks with Piramal Healthcare (erstwhile Nicholas Piramal) to acquire a minority stake in its recently hived off research and development arm, Piramal Life Sciences Ltd.
Kotak and MPM are eyeing about 10% of stake in the R&D arm. However, the deal is yet to be finalised, as the parties haven?t zeroed in on the final valuation of the research arm, sources close to the development said. According to company officials, Piramal Life Sciences is valued between $480 million and $540 million, by financial research firms. Piramal?s R&D arm has 14 compounds in its research pipeline in various areas such as cancer, diabetes, inflammation and infectious diseases. Global players like Carlyle and Blackstone are also said to be keen on the stake.
Swati Piramal, director-strategic alliances, Piramal Healthcare, said, ?We will dilute 10% stake in the R&D arm. It will take place following floating an initial public offer (IPO) for Piramal Life Sciences, which will be in June.? However, she refused to disclose further details.
When contacted, Shari Annes, a spokesperson of MPM Capital, said, ?Until we have a deal in place, we don?t discuss our activities, so we can?t respond directly to your queries.? Nitin Deshmukh, CEO, private equity, Kotak Investment Advisors Ltd, said, ?We are in talks with couple of life sciences companies to acquire minority stakes. We can?t disclose anything further at this point of time.?
According to Venture Intelligence India, a firm that tracks PE deals, the first quarter of FY 2008-09 has witnessed 13 deals worth $355 million in the healthcare and life sciences segment. For the year 2007, about 29 deals worth $478 million took place in the segment.
During April last year, MPM Capital entered into an agreement with Reliance Life Sciences, under which Reliance Life will invest in MPM Capital?s newest fund, MPM BioVentures IV. The fund will have a total corpus of $650 million.
Nowadays, the major pharmaceuticals firms are hiving off their research and development business into new companies in order to attract strategic investments in the high cost-burden drug development sector. Following Sun Pharma?s R&D hive off, Wockhardt, Piramal Healthcare and Ranbaxy have announced the hiving off the R&D business.
