PAG-led India bulk-drugs platform strikes second control deal

 PAG-led India bulk-drugs platform strikes second control deal

Hong Kong-based alternative investment firm PAG Asia Capital and its Indian consortium partners CX Partners and Samara Capital said Wednesday they have agreed to acquire a controlling stake in Hyderabad-based pharmaceutical firm Optimus Drugs Pvt Ltd.

The deal marks the second acquisition by the consortium’s active pharmaceutical ingredients (APIs) platform Sekhmet Pharmaventures, which aims to develop a hub for the production of bulk drug ingredients. In 2020, the consortium had acquired Chennai-based API manufacturer Anjan Drugs.

The consortium didn’t disclose financial details of the latest transaction. However, Mumbai-listed Unichem Laboratories Ltd said separately it is selling its 19.97% stake in Optimus for about Rs 271 crore. Unichem will also sell its remaining 0.02% stake at a later date. This means Optimus has been valued around Rs 1,357 crore ($175 million) in this transaction. That’s 1.2 times its revenue of Rs 1,130 crore for 2020-21.

Optimus Drugs makes pharmaceutical products including advanced intermediates, APIs and finished drugs. The company was founded in 2004 by D Srinivas Reddy and exports its catalogue of over 100 drug products to 40 countries.

The consortium said that the businesses of the two companies, Optimus and Anjan Drugs, are highly complementary and will provide a “solid foundation” for the platform to make further acquisitions.

Nikhil Srivastava, partner, managing director and head of India private equity at PAG, said: “Optimus is a clear leader in R&D, manufacturing, and intellectual property management. We’re looking forward to continuing their mission to deliver high quality, affordable health products across the globe.”

PAG also strikes deals in India, including those in the healthcare sector, outside the platform. Last July, for instance, PAG inked a deal to buy Acme Formulation for $145 million.

PAG said it views India as a particularly attractive market. As of December 31, 2021, PAG has invested over $580 million in private equity deals in India, including the 2021 acquisition of Acme Formulation, a contract development and manufacturing outsourcing company with a focus on complex pharmaceutical products.

PAG has three core strategies: credit and markets, PE and real assets. The firm manages capital on behalf of nearly 300 institutional fund investors, and had AUM of $50 billion as of March 15, 2022.

Reddy, the Optimus founder and managing director, said: “The combined experience of PAG, CX Partners and Samara will help Optimus become a leading player in the global API industry, and further our mission of ensuring better health outcomes for all.”

Jayendra Shah acted as transaction advisor, N.A. Shah Advisory Services LLP acted as financial and tax advisors, and Khaitan & Co. acted as legal advisors to the Optimus promoters in the transaction.

For the PAG-led consortium, AZB acted as legal advisors and Citadel Management Consulting, a Hyderabad-based advisory firm, acted as financial advisor.

Vivek Sinha

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