Advent International to buy controlling stake in Indian API maker Avra Labs

 Advent International to buy controlling stake in Indian API maker Avra Labs

American private equity firm Advent International has agreed to acquire a controlling stake in Hyderabad-based pharmaceutical company Avra Laboratories Pvt. Ltd.

Avra provides contract manufacturing and research services (CRAM) and makes specialty active pharmaceutical ingredients (API), or bulk drugs.

The PE firm did not disclose the quantum of stake or other details of the agreement, but the deal size is pegged at roughly $100 million (about Rs 750 crore).

The acquisition will help the PE firm create an API platform that ranks among top five players in India.

Avra Labs manufactures APIs and advanced intermediates across therapeutic areas including oncology, ophthalmology and electronic chemicals. It focuses on niche proprietary molecules as well as custom synthesis and process optimisation for innovator customers.

Avra, founded by Dr. AV Rama Rao and family in 1995, has one facility in Hyderabad approved by the US drug regulator the Food and Drug Administration (FDA) besides three units in Vizag.

The acquisition of Avra will be Advent’s fifth investment in the past 12 months and underscores the PE firm’s interest in the pharmaceuticals sector. It has invested in over 20 Indian businesses in pharmaceutical R&D, production, and distribution space since it began investing in 2007.

“We continue to be excited about India’s pharmaceutical landscape and investing in Avra Labs will further strengthen our presence in the sector. This acquisition is an important milestone towards our goal of creating a top five merchant API platform in India and allows Advent to be present across the spectrum of generic and patented molecules, while adding marquee innovator pharma customers,” said Pankaj Patwari, managing director at Advent International India.

EY was the sole financial advisor to Avra Labs and its shareholders on this transaction.

Advent claims to have significant investment experience in the healthcare industry. Since 1990, the firm has invested over $10.5 billion in 52 companies in the sector worldwide.

In India, Advent and other private equity players have been either investing or acquiring API makers or formulations company amid growing geopolitical tensions between India and China since 2019.

Indian drugmakers depend on Chinese suppliers for nearly two-thirds of their API requirements but have been ramping up their own production of late, making them attractive to investors.

Advent’s recent bets

Advent opened its Mumbai office in 2009. It has invested or committed nearly $2.9billion in 18 companies either based in India or having operations in the country across sectors a wide variety of sectors such as consumer products, financial services, healthcare, industrial and technology.

Last year, it inked a buyout deal for ZCL Chemicals and participated in a late-stage funding round of tech startup Zenoti.

In India, Advent has made five consumer investments—Crompton Greaves Consumer Electricals, Dixcy Textiles, Enamor, DFM Foods and Eureka Forbes.

In December, it also acquired a majority stake in digital engineering services firm Encora Digital Inc from rival PE firm Warburg Pincus for a valuation of approximately $1.5 billion.

Warburg Pincus, who owned about 80% stake in the company will “retain a minority stake” in Encora.

In addition to Avra Laboratories, Advent’s recent pharmaceutical and healthcare investments include GS Capsule, BioDuro-Sundia, RxBenefits, RA Chem Pharma, Bharat Serums and Vaccines, Industria Chimica Emiliana, Vitaldent, Definitive Healthcare, Zentiva, AccentCare and Iodine Software.

Advent was founded in 1984 and has since invested in over 380 private equity investments across 42 countries. It had $86 billion in assets under management as of September 2021.

Ankit Doshi

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