Advent International has agreed to acquire a controlling stake in RA Chem Pharma Ltd from Bengaluru-based Micro Labs Ltd, as the private equity firm looks to strengthen its presence in India’s pharmaceutical sector.
“We aim to build one of the leading API platforms in India and will leverage our financial and operational resources globally to scale RA Chem Pharma both organically and inorganically,” Shweta Jalan, India head at Advent, said in a statement. API is short of active pharmaceutical ingredients, or bulk drugs that are used to make finished medicines.
The announcement comes just days after VCCircle reported last week that Advent was poised to acquire RA Chem and that it had outbid rival Carlyle Group for the pharmaceutical company.
This is Advent’s second control deal for an Indian pharmaceutical company within a year; it had acquired a majority stake in Bharat Serums & Vaccines Ltd late last year. Overall, Advent has committed more than $700 million in seven Indian companies over the past year in sectors such as healthcare, consumer and financial services.
Advent didn’t disclose the exact size of the stake it is buying in RA Chem nor did it reveal the deal value.
However, a person familiar with the deal told VCCircle that Advent has likely agreed to acquire between 51% and 60% stake in RA Chem. Micro Labs will retain part of its stake, the person said on the condition of anonymity.
The enterprise valuation of Hyderabad-based RA Chem is said to be around Rs 1,000 crore, VCCircle has learnt.
Micro Labs owns a 76% stake in RA Chem and had put the unit up for sale late last year. The rest of the stake is held by founders of RA Chem and other executives.
RA Chem was started in 2003 by J Rajendra Rao, a former Reliance Industries Ltd executive, along with three others.
Micro Labs had acquired a majority stake in RA Chem in late 2016 but decided to sell the unit after facing problems related to integrating the two companies’ operations, VCCircle reported earlier.
Founded in 2003, RA Chem focuses on APIs though it also makes formulations and offers clinical research services to its customers. Its product portfolio ranges from pharmaceuticals to niche areas of animal health and cosmeceuticals. It has four manufacturing units, two research and development laboratories and a clinical research facility.
RA Chem reported a net profit of Rs 51.2 crore on revenue of Rs 461.6 crore for the year through March 2019. This compares with a profit of Rs 36.2 crore on revenue of Rs 431 crore the year before, according to VCCEdge, the data research platform of Mosaic Digital.