Sources say Temasek is in discussion with US-based Advent International to sell its 25 per cent stake, which it bought for Rs 110 crore in 2005. It is looking for a valuation of Rs 250-300 crore. Rothschild is advising Temasek on the stake sale. Beside discussion with PE companies, Temasek is also considering stake sale in Medreich to a strategic investor.
A contract drug manufacturer, Medreich claims a client base spread across 54 countries. Major clients include GlaxoSmithKline, Pfizer, Sanofi Aventis, Wyeth, Adcock Ingram, Mylan and Actavis. Its website says Medreich manufactures two of the top-selling drugs for GSK and Pfizer in India.
When asked, C P Bothra, managing director of Medreich, declined to comment on the matter. Advent International said the company did not want to comment on speculation.
A Temasek spokesperson gave the same response. Advent International has become an active investor in Indian healthcare. In April, it bought majority stake in Hyderabad-based CARE Hospitals for Rs 550 crore. Ace investor Rakesh Jhunjhunwala was one of the major investors in CARE. Advent's deal was the largest in the pharmaceutical and healthcare space this year.
According to experts, finding a PE buyer for the formulation business with a better return will be difficult for Temasek. "Though a lot of PE activities are happening in healthcare facilities, the pure pharmaceutical business is less attractive as far as PEs are concerned," said an investment banker.
According to him, strategic sales are more likely to happen in the case of pharmaceutical companies than a secondary sale of one private equity investor to another PE.
Year 2012 has seen seven PE/venture capital deals worth $100 million in Indian pharmaceuticals, compared to 10 deals worth $412 mn in healthcare facilities and 12 deals worth $242 mn in healthcare services. Only six deals worth $51 million took place in the pharma space in 2011. Till date in the calendar year, 42 deals worth $962 mn took place in the pharma & healthcare segment in India, according to data from VCCedge.
Prior to the CARE Hospitals buyout, Advent made two investments in India. The other investments were in CAMS, 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 opened its India office in 2009, in this city. It has invested in a little over 30 healthcare companies worldwide across sectors such as pharmaceuticals, healthcare services and medical equipment.