Evolvence India Life Sciences Fund (EILSF), a fund focused on investing in the life sciences space in India, is picking up a 21.05% stake in Fermenta Biotech Limited for Rs 40 crore. Thane-based Fermenta is focused on biotechnology, pharmaceuticals and environmental solutions. The firm is a subsidiary of listed DIL Ltd, a 60-year-old pharmaceutical company.
Fermenta Biotech was founded in 1986 under Duphar Interfran Ltd (now DIL Ltd). The deal with Evolvence includes both a secondary stake sale by DIL and a cash infusion. While a stake worth Rs 20 crore is being picked up from DIL, the remaining investment comes in the form of a primary investment. The deal was struck at a price per share of Rs 104.44, valuing Fermenta at more than double its parent, at Rs 190 crore.
The share price of DIL Ltd reacted sharply to the deal, rising by 19% to hit Rs 393.70 per share with a market capitalisation of over Rs 90 crore. Fermenta’s revenues were up by 30% from Rs 37.1 crore in FY09 to Rs 48.31 crore in FY10. Its profit after tax increased from Rs 2.39 crore to Rs 4.85 crore in FY10.
Fermenta is one of the only manufacturers of Vitamin D3 in India and was also the pioneer of Penicillin G Acylase enzyme biocatalyst. Fermenta manufactures cost-effective and efficient Penicillin G Acylase biocatalyst(s) for application in the production of Betalactam intermediates. It is also planning to launch next generation Pencillin G Acylase biocatalyst(s) for application in the manufacture of finished Betalactam antibiotics. These novel biocatalyst(s)- based green technologies are aimed at revolutionising the way antibiotics are manufactured, said its annual report.
Fermenta also provides customised environmental biotech solutions through consultancy, supply of suitable biotech products and services. Its API and biotech manufacturing facilities are located in Mandi district, Himachal Pradesh while R&D facilities are in Kullu and Thane.
FBL intends to strengthen and broaden its product portfolio with increased focus on R&D initiatives and augmenting its manufacturing facilities. Currently, FBL’s products are largely manufactured at its factory in Mandi, Himachal Pradesh. This would be supplemented with a new state-of-the-art facility in Dahej SEZ, Gujarat which is currently under construction and expected to begin production in mid-2011.
”Fermenta has embarked on a strategy to strengthen and broaden its portfolio of products and to expand its manufacturing capacity to meet growing demand. In particular, Fermenta is focused on consolidating growth in its expanding Vitamin D3 franchise and in accelerating commercialization of its novel enzymes for use in manufacturing semi-synthetic antibiotics,” said Peter Bains, Chairman of Fermenta.
“EILSF is excited about partnering with Fermenta Biotech Ltd. (FBL) in its endeavors to introduce products and technologies that improve quality of life and enable environment- friendly manufacturing processes. This investment fits well with EILSF’s thesis that Indian pharma and medtech companies will establish market leadership through their innovative approaches to delivering high quality healthcare at low cost,” said EILSF’s Viswanath Chebrol.
For Evolvence, a $90-100 million fund, this will be its fifth disclosed investment. Its last known deal was more than a year back, Rs 35-crore investment in Sutures India Private Limited, makers of surgical consumables. The life sciences focused fund announced an investment of Rs 25 crore in Chennai based Anjan Drugs, one of the largest US-FDA approved manufacturers of drugs for
epilepsy. Its other two deals are in advanced drug delivery mechanism company Gland Pharma and cancer centre network Health Care Global.
Allegro Corporate Finance advisors were the exclusive advisors to DIL and FBL on this transaction.