Quadria, TPG eye up to 25Percent stake for $100 mn in Samarth Life Sciences

Private equity investors including Quadria Capital and TPG Capital have expressed initial interest to invest about $100 million for a 20-25% stake in critical care drugs provider Samarth Life Sciences, three people familiar with the matter said.

“The transaction is expected to be purely secondary with the promoter group selling some of its stake," one of the people cited above said on the condition of anonymity. If the deal goes through, this would be first external investment for the Mumbai-based company, which is wholly owned by the promoter group.

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In a secondary transaction, shareholders sell their stakes to existing or new investors, and no new capital is injected into the company. Secondary transactions usually take place at a discount to the primary shares which are newly issued by the company.

“While none of the investors have placed bids, they have engaged in initial discussions, and O3 Capital is running the mandate," a second person familiar with the matter said. Queries emailed to Samarth, O3 and Quadria Capital remained unanswered. A TPG spokesperson declined to comment.

Life-saving critical care

Incorporated as Sohini Holdings & Finance Pvt. Ltd in 1997, the company was rebranded Samarth Life Sciences Pvt. Ltd seven years later. Founded by first-generation entrepreneur Gunwantlal Shah, Samarth conducts research, develops and manufactures a broad range of life-saving critical care and other drugs and markets them to hospitals. Some of its flagship brands include Adrenor, Atrapure, Caprin, Cpressin, Distinon, Dexmedine, and Endocryl.

“Over the last year (FY24), the company clocked ₹150-180 crore in Ebitda, and is on track to deliver ₹200 crore in FY25," the second person cited above said. Samarth also exports to the UK and countries in South America, Southeast Asia and Africa.

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On its website, Samarth has outlined plans to aggressively expand and collaborate with global pharmaceutical companies in areas including development and manufacturing of biologics in genetically modified organisms, strengthen drugs by use of Novel Drug Delivery Systems, and form alliances for contract manufacturing and joint ventures. It competes with bigger rivals such as Cipla, Macleods and Gufic Group across certain categories.

The company's revenue from operations in FY23 was ₹340 crore against a profit of ₹74 crore, as per statutory filings sourced by Tofler.

Deal-making flurry

India’s pharmaceutical space has seen a flurry of deal-making over the last year as investors look to leverage the diversification in global supply chains, which has benefited the pharma and healthcare manufacturing sectors.

Earlier this year, Bengaluru-based Maiva Pharma secured ₹1,000 crore in a mix of primary and secondary funding from a fund managed by Morgan Stanley Private Equity Asia and InvAscent, to set up a new manufacturing plant near Hosur in Tamil Nadu.

ChrysCapital invested $70 million in Ahmedabad-based domestic formulations firm La Renon Healthcare in April. In May, the private equity firm, which is invested in a host of pharma companies, told Mint about its plans to ramp up its investments in healthcare delivery and services such as diagnostics, medical devices, and contract development and manufacturing organisations, in yet another sign of investor optimism in the space.

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Broadly, domestic deals in India's pharmaceutical and healthcare sectors in the September quarter of this year touched $1.9 billion, the highest since the second quarter of FY21, Grant Thorton said in a report published earlier this week.

Despite a strong pace of deal-making, deal value dropped by nearly 91% from the previous quarter, the report said, citing the absence of big-ticket transactions. The private equity space was largely driven by smaller deals less than or equal to $5 million, which accounted for 76% of the total volumes.