Shilpa Medicare
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TA Associates invests $25.5 mn in Shilpa Medicare

27 December, 2016

US-based private equity investor TA Associates Management Lp has invested Rs 172.425 crore ($25.5 million) in drug ingredients maker Shilpa Medicare Ltd.

The Indian company said in a stock-exchange filing its board has allotted 3.025 million shares to the PE firm at Rs 570 apiece. This translates to a 3.7% stake.  

TA Associates’ director Naresh Patwari will join the company’s board as an additional director, the firm said.

Shilpa Medicare has a track record of churning out good returns for PE investors. It is backed by PE firms including Tano Capital, which has an 8.01% stake, and Baring India, which owns a 9.22% stake, in the company.

Baring India Private Equity initially invested in Shilpa Medicare in 2010 for Rs 70 crore while Tano Capital has invested twice from its current fund, once in 2012 and 2014.

Previously, Tano Capital invested around $2 million in Shilpa Medicare in early 2006 from its Fund I and exited in August 2010 with 4.5 times returns. Prior to that, Strategic Ventures Fund Ltd, a private equity fund managed by Frontline Strategy, also exited Shilpa Medicare with four-fold returns.  

Hyderabad-based Shilpa Medicare makes ingredients that are used to make anti-cancer drugs and anti-retroviral drugs. The firm also makes active pharmaceuticals ingredients for medications used to treat multiple sclerosis, immunosuppressant and is building a pipeline of novel drug delivery systems and biotech products, its website says.

The firm’s stock fell 8.3% on Monday to close at Rs 692.40 apiece on the BSE, giving it a market value of Rs 5, 094 crore. It reported revenue of Rs 695 crore for 2015-16, as per stock exchange data. 

Shilpa Medicare is the second drug ingredients maker to receive PE funding within a week. Morgan Stanley Private Equity last week invested $25 million in drug ingredients company ZCL Chemicals Ltd.

Earlier in December, Hyderabad-based Laurus Labs, a maker of bulk drugs, backed by PE firm Warburg Pincus, listed on stock exchanges after attracting investors such as Goldman Sachs AMC, Nomura and HBM Partners for its anchor book

TA Associates

This is TA Associates’ second healthcare-related investment. The PE firm also owns a stake in Dr Lal Pathlabs Ltd, which went public in December 2015. 

Earlier this year, it had invested $140 million (Rs 937 crore) in TCNS Clothing Co Pvt. Ltd, which owns the ‘W’ brand of clothing for women, to buy out shares from existing shareholders including Matrix Partners India.

TA Associates has existing investments in data analytics provider Fractal Analytics, broadband services provider Atria Convergence Technologies, mobile handset maker Micromax and financial technology services firm Bill Desk and Tega Industries, which makes products for the mining industry.  

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TA Associates invests $25.5 mn in Shilpa Medicare

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