New Delhi: Home-grown private equity (PE) firm ChrysCapital has decided to offload its remaining stake in Intas Pharmaceuticals Ltd, a privately held drug maker based in Ahmedabad, and is holding discussions to dilute at least half of the stake shortly, two people aware of the development said.
“The company is looking to dilute around 3% now and has reached out to other bulge-bracket PE firms for the same. The other 3%, they will carry on to the next fund,” said one of the persons mentioned above on condition of anonymity as the PE firm has just initiated the stake-sale process.
Delhi-based ChrysCapital, which had first invested in the pharmaceutical firm in 2006, its first bet in the pharma space, is expected to get as much as $100 million from the sale of its stake, said the second person, also on condition of anonymity.
When contacted, an Intas spokesperson confirmed the development and said: “It is true that ChrysCapital is looking for partial exit of its stake in the company. However, it’s too premature to comment on the valuation parameters and nothing is concrete regarding the investor or valuation.”
Moelis India has been given the task of finding a buyer for the stake, he said.
Separate e-mail queries and phone calls to ChrysCapital and Moelis India did not elicit any response.
ChrysCapital invested in Intas through two funds—ChrysCapital III and ChrysCapital V LLC. It pumped in a total of Rs350 crore.
ChrysCapital had first acquired a 12.5% equity stake in the pharma company for around Rs50 crore from ICICI Ventures. Its holding fell by a little over 1% following the merger of promoter group firm Astron Research with Intas.
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Later in 2012, the private equity fund raised its holding to 15% by acquiring additional stake for about Rs300 crore, after Intas deferred its initial public offering plans due to volatile market conditions.
In November 2014, ChrysCapital part exited the firm by selling a 10.2% stake to Temasek Holdings Pte Ltd at close to 10 times its original investment. While the fund did not disclose the details of the transaction at the time, Mint had reported that the stake was sold for Rs880 crore.
Now, it owns nearly 6% stake in Intas.
Given the profit it made from the Temasek deal, ChrysCapital is estimated to be sitting on huge unrealized gains on its 10-year-old investment in the firm.
Intas is among the top 10 Indian drug firms and the largest privately held pharmaceutical company in India, with annual turnover in excess of $1 billion, of which 60% comes from international operations.
In October, Intas agreed to buy Actavis UK Ltd and Actavis Ireland Ltd from Israeli generic drug maker Teva Pharmaceutical Industries Ltd for an enterprise value of about £600 million (Rs5,083 crore) in an all-cash transaction.
Once the stake sale by ChrysCapital is completed, it will be yet another major exit by the PE firm which has been a major investor in the pharmaceutical space.
In May 2015, the PE firm sold its entire 11% stake in Mankind Pharma to Capital International Private Equity Fund at close to 10 times the value of its original investment. The deal was closed at $215 million. The firm had invested $24 million in Mankind Pharma in 2007.
ChrysCapital is also looking to exit its investment in Eris Lifesciences Pvt Ltd. It had invested about Rs160 crore in the firm in 2011 for a 16% stake.
On 10 October, Mint reported that Eris Lifesciences has hired three investment banks—Axis Capital Ltd, Credit Suisse Securities (India) Pvt. Ltd and Citigroup Global Markets India Pvt. Ltd—to manage its initial share sale, which will provide an opportunity to ChrysCapital to sell its entire stake in the drug maker. In December 2015, Mint reported that ChrysCapital was planning to exit its five-year-old investment in Eris for around Rs600-650 crore