Advent, Carlyle, Fosun in early talks to buy stake in Glenmark’s API business

MUMBAI : Three private equity (PE) funds are in early talks to acquire a significant stake in Glenmark Pharmaceuticals Ltd’s active pharmaceutical ingredient (API) business, said two people directly aware of the development.

According to the people cited above, global private equity funds The Carlyle Group, Advent International and China’s Fosun International are holding separate talks with Glenmark to pick up the active pharmaceutical ingredient business, which will be de-merged into a separate entity.

The deal is expected to be valfind ued at ₹1,500 crore, or more, they said, requesting anonymity.

In a regulatory filing in May, Glenmark had said that it had appointed a committee to assess the feasibility of hiving off the API and consumer care businesses to create separate entities.

“The company has decided to separate the businesses and has appointed Avendus Capital as the investment banking advisor to potential suitors,” said the first person.

“The structure of the deal is not yet finalised and will depend on what the negotiations lead to” said the first person cited above.

When contacted, an Avendus Capital spokesperson said: “As a matter of policy, Avendus does not comment on transactions.”

Email queries to Glenmark seeking comments failed to elicit any response till press time.

In May, Glenmark had not disclosed the reasons for the potential de-merger. However, the people cited above said the move was part of its overall debt reduction strategy. In FY18, the company’s debt stood at ₹4,723 crore, compared to ₹4,747 crore in 2016-17.

A recent India Rating report said that Glenmark’s pricing erosion in the US generics market had resulted in a year-on-year decline of over 35% to ₹1,440 crore during the first half of FY18, and its earnings before interest, taxes, depreciation, and amortisation (Ebitda) was stressed.

Glenmark has been in the API business since 2003 and has a portfolio of over 100 products across key regulated markets.

Till date, it has filed over 190 drug master files (DMFs) in various markets.

The reported vertical reported sales of ₹878 crore in FY18, up 8.5% from the year-ago period.Glenmark’s API basket includes perindopril, lercanidipine, amiodarone, etoricoxib and adapalene.

GLENMARK APPOINTS AVENDUS AS IBANKING ADVISOR FOR DEAL THAT IS EXPECTED TO BE VALUED AT MORE THAN ₹1,500 CRORE