PE major Advent International will acquire a 50.1% stake in Suven Pharmaceuticals from promoter Jasti family for about 6,300 crore, following which it intends to merge the drugmaker with a portfolio company, Cohance Lifesciences.
As part of the transaction, Advent will also be making an open offer to acquire an additional 26% stake from public shareholders. Advent International is acquiring the family’s stake at `495 per share, while the open offer price is yet to be finalised.
The merger of Cohance with Suven would help in building a leading Clinical Drug Development and Manufacturing (CDMO) and merchant Active Pharmaceutical Ingredient (API) player, servicing the pharma and specialty chemical markets. The merger, which is subject to regulatory and other customary approvals, will be evaluated by the board taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders, the drug major said in the stock exchange update.
Following the deal, Advent International will hold a majority stake in the pharmaceutical company. Advent was advised by Kotak Investment Banking and Avendus Capital while Barclays Bank was the financial advisor to Suven. Global PE firm Blackstone was also believed to be in the race to buy Suven Pharma.
“Advent is the ideal partner for us, with deep expertise in healthcare, and a global network of professionals and experts. Their experience and resources will launch the next phase of growth for Suven,” Venkateswarlu Jasti, managing director at Suven Pharmaceuticals said, adding the proposed merger with Cohance will help the companies offer a broader set of services.
Suven Pharmaceuticals, which was demerged from its parent entity, Suven Life Sciences in 2020, has a significant presence in Indian pharma CDMO space. The company had posted a 20% compounded annual growth rate over the last four years, with over 43% Ebitda margins.
“Our vision for Suven is to build a $1-billion global leader by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development and scaling up manufacturing and R&D. We will also look at acquiring synergistic businesses globally, to further build capabilities and gain new customer access,” Advent International managing director Pankaj Patwari said.
“The combined entity (Suven and Cohance) will have three massive growth vectors across pharma CDMO, speciality chemicals and merchant API, each of which have strong macro tailwinds,” he added.
Cohance, wholly-owned by Advent, was set up in November 2022 to create a new brand identity for its CDMO and API platform and to bring together three Advent portfolio companies – RA Chem Pharma, ZCL Chemicals and Avra Laboratories.
Cohance, which has two business units (CDMO and API+) has seven manufacturing facilities and had recorded a total proforma revenue of `1,280 crore in FY22.
Advent has been investing in India since 2007, and currently has invested or committed over $3.2 billion across 14 companies which have headquarters or operations in the country. Advent’s previous healthcare investments in India include Bharat Serums and Vaccines. Globally, Advent has invested over $10.4 billion across 51 companies in healthcare.