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