Navis Capital in talks to buy stake in Twilight Litaka

The Indian pharmaceutical market continues to attract private equity (PE) investors. Following the recent investment of Rs 300 crore by ChrysCapital in Intas Pharma, another deal is expected to be announced soon. Malaysia-based Navis Capital Partners is in talks with Twilight Litaka Pharma Ltd for a possible investment of about Rs 150 crore in the company. The percentage of stake in question is not clear.

Navis is known for buying a controlling stake in portfolio companies. Last year, it took a majority stake in automotive graphic firm Classic Stripes for almost $100 million. In 2008, the PE fund acquired about 60 per cent stake in Sah Petroelum, a lubricants maker listed on the Bombay Stock Exchange.

When asked, Gopal Ramourti, managing director of Twilight Litaka, confirmed the development. He said, "We have obtained approval from the shareholders for raising up to $30 mn through issue of additional equity shares. Accordingly, the company has discussed with various investors, including Navis Capital, as part of the fund raising plan. Presently, we are at an advanced stage of finalisation." He refused to share further details due to the "sensitive nature of the information".

Richard Foyston, founder partner and chairman of Navis, said, “As a matter of policy, we do not confirm any deals that we are considering or not considering.”

The promoters have only 5.09 per cent stake in Twilight. The remaining stake is with other investors, including ICICI Bank, which holds a little more than six per cent in the company.

Navis has also invested in India Hospitality Corporation, Nirula's and Mars Restaurant. Its other investments in India include Edutech, the ITM Group of institutions, and Andromeda, an India-focused business process outsourcing company. It has invested about $3 billion in various companies across Asia.

In the recent past, the pharma industry has seen investments from many leading PE firms. Apart from the ChrysCapital deal, Kotak Private Equity, an arm of private sector lender Kotak Mahindra Bank, had acquired 3.4 per cent stake in Hyderabad-based Natco Pharma, by investing Rs 23.7 crore last December.

According to a recent PricewaterhouseCoopers report, the domestic pharma market is expected to grow at a compounded annual rate of 15-20 per cent to reach a value anywhere between $50 bn and $74 bn by 2020.

Last month, Tano Capital invested about Rs 8 crore in listed company Shilpa Medicare Ltd, acquiring a 1.5 per cent stake. In 2010, about 10 deals worth $120 million were struck in the Indian pharma space. In 2011, the number of deals went down to six, worth $51 million, and till date in 2012, four deals worth $82 million have been done.