PAG invests Rs 2,000 crore in Optimus Drugs for controlling stake

Exact stake size not revealed, sources put the number at 70%

PAG, an Asia-Pacific focussed investment firm, is picking up a controlling stake in Hyderabad based Optimus Drugs, a statement said. Sources reveal that PAG along with consortium partners CX Partners and Samara Capital have reached an agreement to invest Rs 2,000 crore in Optimus drugs. PAG did not disclose the exact stake size.

A source close to the development revealed that Optimus Drugs, Optimus Pharma (a 100 per cent promoter owned company), Optimus Lifesciences (100 per cent promoter owned company) are part of the transaction. While exact stake size is not disclosed, the source said that PAG and consortium will have a controlling stake in Optimus Drugs. It is estimated to be around 70 per cent.

Unichem had picked up a 20 per cent stake in two Optimus Group companies in 2018. The deal included the 20 per cent stake of Unichem.

According to a regulatory filing by Unichem Laboratories, its board has approved entering into a share purchase agreement with Optimus and Sekhmet Pharmaventures (Purchaser). Unichem Labs has proposed to sell its entire shareholding in Optimus to Sekhmet by secondary transfer of shares - which is sale of 19.97 per cent equity shares in first tranche for an aggregate consideration of Rs 270.99 crore ($35.8 million).

Optimus Drugs is a vertically integrated manufacturer of pharmaceutical products including advanced intermediates, active pharmaceutical ingredients (APIs) and finished drugs. The company was founded in 2004 by D Srinivas Reddy and today exports its catalog of more than 100 drug products to 40 countries.

The deal marks the second acquisition by the consortium’s API platform, Sekhmet Pharmaventures, which aims to develop a best-in-class hub for the development and production of bulk drug ingredients. In 2020, the consortium acquired control of Chennai-based API manufacturer Anjan Drugs.

"The businesses of the two companies are highly complementary and will provide a solid foundation for the platform to make further acquisitions," the statement said.

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 (CDMO) company with a focus on complex pharmaceutical products.

Nikhil Srivastava, Partner and Managing Director, Head of India Private Equity for PAG said: “We are very pleased to be partnering with Dr. Reddy, Optimus Drugs and its employees to help them become one of the leading API players globally. 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.”

Said D Srinivas Reddy, Optimus Founder and Managing Director: “We are excited to be a part of this PAG-led platform. 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.”

Reddy and his family owned around 80 per cent in the Group companies, according to market sources.

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 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.