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PAG consortium to acquire controlling stake in Optimus group firms
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Asian alternative investment firm PAG has agreed to buy a controlling stake in three group entities of Hyderabad-based drugmaker Optimus group, along with consortium partners CX Partners and Samara Capital.

The PAG-led consortium will invest a total of around Rs 2,000 crore (about $259 million) for a 74% stake each in group entities Optimus Drugs Pvt. Ltd, Optimus Pharma and Optimus Lifesciences, said two people close to the development.

PAG announced on Wednesday the acquisition in Optimus Drugs.

Both Optimus and PAG did not respond to specific queries on the Optimus Pharma and Optimus Lifesciences deals.

Dr. D. Srinivas Reddy and his family own more than 80% of Optimus group. The rest 19.97% stake is held by Unichem Laboratories.

Reddy owns 100% in Optimus Pharma and Optimus Lifesciences.

VCCircle exclusively reported in April about PAG and other investors’ impending investment in Optimus.

Sekhmet Pharmaventures, the PAG-led consortium’s platform for active pharmaceutical ingredients (APIs), will buy Unichem’s entire stake in Optimus Drugs for Rs 270.99 crore, Unichem said in a statement late on Tuesday.

This will mark a major gain for Unichem which bought the stake for Rs 72.08 crore in 2018. Unichem had purchased 20% each in two bulk drug makers of Optimus group, the other being Optrix Laboratories Pvt. Ltd, which will now be merged with Optimus Drugs.

Founded in 2004 by Dr. Reddy, Optimus Drugs makes pharmaceutical products including advanced intermediates, APIs and finished drugs, and exports over 100 drugs to 40 countries.

This is the second acquisition by Sekhmet, which aims to develop a hub for production of bulk drug ingredients. In 2020, Sekhmet took control of Chennai-based API manufacturer Anjan Drugs Pvt. Ltd. The businesses of Anjan Drugs and Optimus are highly complementary and will provide a solid foundation for the platform to make further acquisitions, PAG said in a statement.

“The combined experience of PAG, CX Partners and Samara will help Optimus become a leading player in the global API industry, and further our mission of ensuring better health outcomes for all,” said Reddy, who is also the managing director of Optimus.

Both CX Partners and Samara Capital are homegrown private equity firms that invest in mid-sized firms. PAG invests primarily in Asia-Pacific. This is PAG’s third major pharma bet in India.

Last year, the investor took a controlling stake in a north India-based specialty formulations business in the holding firm of Acme Group of Companies. In 2020, PAG joined two other private equity firms to set up an API platform which went on to acquire Anjan Drugs Pvt. Ltd.

PAG views India as a particularly attractive market. As of December-end, it has invested over $580 million in private equity deals in India.

PAG had around $50 billion in assets under management as of 15 March.

“Optimus is a clear leader in R&D, manufacturing, and intellectual property management. We’re looking forward to continuing their mission to deliver high quality, affordable health products across the globe,” said Nikhil Srivastava, partner and managing director, head of India private equity at PAG.

Jayendra Shah acted as transaction adviser, N.A. Shah Advisory Services LLP acted as financial and tax advisers and Khaitan & Co. acted as legal advisers for promoters.

For the PAG-led consortium, AZB acted as legal advisers and Citadel Management Consulting, a Hyderabad-based advisory firm, acted as financial adviser.

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