War­burg to Buy up to 25% in Hyd Drug co Lau­rus for 700-800 cr

The Economic Times - - Business Of Brands - SNEHA SHAH

Global pri­vate eq­uity fund War­burg Pincus will pur­chase as much as a fourth of Hy­der­abad-based drug in­gre­di­ent maker Lau­rus Labs for $125-150 mil­lion (.`700-800 crore), three people with di­rect knowl­edge of the deal said. The fund, which has in­vested more than $1 bil­lion in In­dia un­til now, is await­ing reg­u­la­tory clear­ances, these people said. “War­burg Pincus has agreed to pur­chase up to 25% stake in Lau­rus and its curent in­vestor PE fund Fidelity might exit through this trans­ac­tion,” a per­son with di­rect knowl­edge of the de­vel­op­ment said. Fidelity Growth Part­ners in­vested .` 200 crore in 2012. In­vest­ment bank Jef­feries ad­vised the com­pany on the fund-rais­ing. Founded by Satya­narayana Chava in 2005, Lau­rus is one of the fastest-grow­ing mak­ers of ac­tive phar­ma­ceu­ti­cal in­gre­di­ents (APIs) for on­col­ogy and anti-retro­vi­ral drugs apart from spe­cialty in­gre­di­ents for the nu­traceu­ti­cal in­dus­try. “Go­ing by the val­u­a­tion of­fered by War­burg Pincus, the com­pany is cur­rently worth $500-600 mil­lion,” a banker with knowl­edge of the de­vel­op­ment said. The com­pany will use the funds to build two more fac­to­ries be­sides the ex­ist­ing one in Visakha­p­at­nam to boost its ca­pac­ity to 1.4 mil­lion litres from 8,00,000 litres. The War­burg Pincus spokesper­son in In­dia was not avail­able for com­ment, while Chava, founder and man­ag­ing di­rec­tor of Lau­rus Labs, did not re­spond to emailed queries. Last year, the fund sold its con­trol­ling stake in tyre maker ATG to global buy­out fund KKR for $500 mil­lion. War­burg Pincus raised a global fund of $11 bil­lion last year giv­ing it enough room to in­vest more money in high-growth mar­kets such as In­dia. It has been an ac­tive in­vestor in the coun­try with more than $1 bil­lion in com­pa­nies such as ACB In­dia, Amtek Auto, Au Fi­nanciers, AVTEC, among oth­ers. Biba Ap­par­els, Cap­i­tal First, Dili­gent Power, Gan­gavaram Port, Lemon Tree and Quikr, among oth­ers. Lau­rus will be War­burg’s first deal in the fas­t­ex­pand­ing In­dian phar­ma­ceu­ti­cal sec­tor. The fund has pre­vi­ously in­vested in Me­trop­o­lis, a di­ag­nos­tics chain. As per a study by global con­sult­ing firm McKin­sey in 2013, In­dia’s phar­ma­ceu­ti­cal mar­ket will more than dou­ble from the cur­rent year’s $18 bil­lion to over $45 bil­lion by 2020. In­dia will be among the top three phar­ma­ceu­ti­cal mar­kets by in­cre­men­tal growth by then. In ab­so­lute size, the coun­try will be­come the sixth big­gest glob­ally by 2020, the re­por­pre­dicted. “PE funds have been quite fo­cused on the pharma seg­ment in re­cent times when growth has slowed and the ru­pee de­pre­ci­ated in a big way,” said San­jeev Kr­ish­nan, ex­ec­u­tive di­rec­tor and head, pri­vate eq­uity trans­ac­tions, ad­vi­sory ser­vices at Price­wa­ter­house­Coop­ers In­dia.

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