PEs are going to see healthy growth in life sciences: K V Ramakrishna

We believe there are several interesting opportunities at the growth stage, across biopharma, says Ramakrishna

Almost a decade after it raised its first life sciences fund, Kotak Private Equity Group is in the process of raising the second one. K V Ramakrishna, chief executive officer, to Sohini Das. Edited excerpts:

What is the size of the fund?

The target is Rs 5 billion, with a greenshoe (over-allotment) option of Rs 5 billion.

What returns do you expect?

In line with past experience, we expect  over 20 per cent IRR (internal rate of return) from individual investments.

What returns did you get in your first life sciences fund?

Realised returns are over 27 per cent IRR.

Which companies had you invested in?

Intas Biopharmaceuticals, Rubicon Research, Indus Biotech, Natco Pharma and Advanced Enzymes. We had also invested in several companies across the life sciences segment from our other sector-agnostic growth funds. Some of these include Metahelix Life Sciences, VLife, Manipal Hospitals and Bharat Serums & Vaccines. The team has a very successful track record of investing in 40-plus companies in this space in their investment careers.

Why are you bullish on the life sciences sector in India? What kind of growth do you see?

For us, the segment includes pharmaceuticals, biotechnology and health care. With an ageing population, rising middle class, increasing lifestyle diseases, higher insurance penetration and growing government expenditure, we expect the life sciences sector to continue to demonstrate healthy growth over the next several years. Various reports have indicated this segment will grow to over Rs 10 lakh crore (Rs 10 trillion) by the year 2020.

What time frame do you have in mind for exits?

We would look at exit timelines of four to five years in individual investments.

With other PEs like KKR and Blackstone bullish on the pharmaceutical and life sciences sector, what kind of firms do you want to invest in?

Most of these funds are focused on very large investments, more particularly in health care delivery, i.e hospitals. We believe there are several interesting opportunities at the growth stage, across biopharma, niche formulations, speciality APIs, nutraceuticals, medical devices, etc.

Is it an off-shore fund?

This is a domestic fund, a Sebi-registered AIF (Alternative Investment Fund)-2.