Temasek, the Singapore Government owned sovereign fund, has started discussions with private equity players to offload its stake in Medreich Pharma. According to sources in the know, Temasek is engaged in discussion with US-based Advent International to sell its 25 per cent stake in Bangalore-based Medreich Pharma.
Temasek, which bought the stake for Rs 110 crore in 2005, is looking for a valuation of Rs 250-300 crore for its 25 per cent stake in Medreich. Rothschild is advising Temasek to sell its stake. Besides its discussions with PE players, Temasek is also considering stake sale in Medreich to a strategic investor.
Medreich, a contract drug manufacturer, is claimed to have a client base spread across 54 countries, with major clients include GSK, Pfizer, Sanofi Aventis, Wyeth, Adcock Ingram, Mylan and Actavis. According to company website, Medreich manufactures 2 of the top-selling drugs for GSK and Pfizer in India.
When contacted, CP Bothra, MD, Medreich Pharma refused to comment on the matter. Response from Advent International said that company does not want to comment on speculations. A Temasek spokesperson also said company will not comment on speculations.
Advent International has become an active investor in Indian healthcare space with making the largest PE buyout in healthcare services space in 2012. In April, Advent bought majority stake in Hyderabad-based hospital chain CARE Hospitals for Rs 550 crore. Ace investor Rakesh Jhunjhunwala was one of the major investors in CARE Hospitals. Advent's deal is the largest deal in pharma & healthcare space in India this year.
However, according to industry experts, finding a PE buyer for formulation business with a better return will be difficult for Temasek. "Though a lot of PE activities are happening in healthcare facilities space, pure pharmaceutical business is less attractive as far as PEs are concerned," said an investment banker. According to him, strategic sales are likely to happen in case of pharmaceutical companies than a secondary sale of one private equity investor to another PE.
Year 2012 witnessed 7 PE/ VC deals worth mere $100 million in Indian pharmaceuticals space, compared to 10 deals worth $412 million in healthcare facilities and 12 deals worth $242 million in healthcare services space. Only 6 deals worth $51 million took place in pharma space in 2011. Till date in 2012, 42 deals worth $962 million took place in pharma & healthcare sector in India, according to data from VCCedge.
Prior to CARE Hospitals buyout, Advent made two investments in India. Other investments are, CAMS, the provider of outsourced transaction processing for mutual funds & insurance, and Element-K, a corporate e-learning business acquired by SkillSoft, a North American portfolio company of Advent. Advent has opened its Indian office in Mumbai in 2009.
Advent has invested in more than 30 healthcare companies worldwide across sectors including pharmaceuticals, healthcare services and medical equipment.