Advent International on Monday said it has agreed to acquire a controlling stake in Avra Laboratories Pvt Ltd as the private equity firm seeks to boost its active pharmaceutical ingredients (API) business in India.
Advent bought the stake from Avra's promoters, A V Rama Rao, a scientist and a Padma Bhushan and Padma Shri awardee, and his family, said the private equity firm in a statement without disclosing the financial details.
A person familiar with the development told VCCircle that the deal size is around $100 million.
A V Rama Rao, Founder and Managing Director, Avra, said in the statement that Advent’s API platform resources, research and development (R&D) capabilities and global reach will help the company explore new markets and products, as well as consolidate its position in existing portfolio.
Hyderabad-based Avra, which was founded in 1995, manufacturers APIs and advanced intermediates across therapeutic areas including oncology, ophthalmology and electronic chemical. It has one US FDA (Food and Drug Administration) approved facility in Hyderabad as well as three units in Visakhapatnam.
Pankaj Patwari, Managing Director at Advent International India, said in the statement that the acquisition is important for the private equity firm to create a "top five merchant API platform in India" and boost its presence across the spectrum of generic and patented molecules.
Advent and a bunch of private equity firms have been quite aggressively building their API portfolio in India following the border tensions between India and China in 2019. Indian drugmakers depend on Chinese suppliers for nearly two-thirds of their API requirements but have been ramping up their own production of late, making them attractive to investors.
Last year in February, Advent agreed to acquire a majority stake in bulk drugs manufacturer ZCL Chemicals Ltd. This deal also paved an exit for Morgan Stanley Private Equity Asia. In its first API bet, Advent agreed to acquire a controlling stake in RA Chem Pharma Ltd from Bengaluru-based Micro Labs Ltd in July 2020.
In a recent transaction in the API space in the country, World Bank’s International Finance Corporation (IFC) proposed to make an equity investment of $50 million (Rs 371 crore) in Hikal Ltd in November last year.
Advent, which has been investing in India since 2007, has invested/committed almost $2.9 billion in 18 companies with headquarters or operations in the country.
Ernst and Young LLP was the sole financial advisor to the shareholders of Avra for this transaction.