Healthcare-focused private equity firm Quadria Capital and Dubai-based Gulf Islamic Investments (GII) have bought a minority stake in Indian drugmaker Encube Ethicals Pvt. Ltd.
The India- and Southeast Asia-focussed PE firm has picked up a 15% stake in Encube through a combination of primary and secondary transactions. Gulf Islamic joined Quadria as a co-investor.
Neither the two investors nor Encube disclosed the exact deal value. However, Quadria likely invested $100-120 million (Rs 740-890 crore) in Encube, valuing the company up to $800 million.
For GII, the deal expands its India healthcare portfolio. The firm had made its first India foray in January 2020 when it closed its maiden healthcare deal. It had invested in a chain of hospitals and a diagnostics company, GII co-founder Pankaj Gupta had told The Capital Quest in March. He didn’t identify the two companies. At the time, Gupta had also said that GII was close to signing its second set of deals in India.
The Encube deal also provided an exit to Indian private equity firm Multiples Alternate Asset Management.
Based on the deal valuations, Multiples PE is likely to have fetched about Rs 600 crore from the complete exit. This would mean it earned a multiple of about 2.2 times on its five-year bet and clocked an internal rate of return (IRR), or annualised return, of close to 18-19% in rupee terms, as per The Capital Quest’s estimates.
An email query sent to Multiples PE did not yield a response till the time of publishing this report.
From the primary deal, Encube will use the capital to expand its manufacturing footprint and invest in its complex-generics business. It may also look to enter other markets and explore inorganic growth opportunities.
Kotak Mahindra Capital Co was the sole financial advisor to Encube and the selling shareholder on the deal.
This is Quadria’s second investment in quick succession. It sealed a Rs 450-crore investment last week in disposable hygiene products maker Nobel Hygiene.
Quadria Capital’s co-founder and managing director Amit Varma told The Economic Times newspaper the investment firm aims to invest $400-500 million in India over the next 18-24 months.
“We have a rich pipeline of opportunities and plan a diversified portfolio across most attractive healthcare sub sectors,” Varma said, adding the coronavirus pandemic underscores the need for countries like India to boost spending on healthcare infrastructure.
Quadria is already an investor in Rakesh Jhunjhunwala-backed Concord Biotech and the Asian Institute of Gastroenterology. In 2019, it invested in Akums Drugs & Pharmaceuticals, India’s largest pharmaceutical contract manufacturing firm.
Quadria was founded in 2012 by Varma and Abrar Mir. It raised $300 million from its first fund in 2014. In March 2020, the firm raised $600 million. It chooses to invest along with its limited partners in the region.
Varma told The Economic Times the firm was looking to deploy about $800-900 million in total from the second fund. It operates from offices based in Singapore and New Delhi.