Warburg Pincus invests Rs 550 cr in Laurus Labs to acquire stake

Warburg Pincus, with this investment, will join Fidelity Growth Partners India and Boston-based Fidelity Biosciences, which led earlier round of investment in 2012

An affiliate of private equity (PE) firm Warburg Pincus has acquired a minority stake in Laurus Labs, a Visakhapatnam-based developer of active pharmaceutical ingredients (APIs), for about Rs 550 crore, Laurus said in a statement. With this, Warburg becomes an investor in the company, along with  Fidelity Growth Partners India and Boston-based Fidelity Biosciences, which led an earlier round of investment in 2012.  

Fidelity Growth Partners India and Fidelity Biosciences part-exited in the latest transaction.

Although the company did not share the details of the deal, according to the Competition Commission of India (CCI)’s approval note for the transaction, the PE firm picked up a 32.29 per cent effective stake. The deal values the company at Rs  1,700 crore ($280 million). Laurus will issue a mix of compulsory convertible preference shares and also purchase of shares from existing PE investor.

Laurus is a manufacturer of APIs for anti-retroviral (ARV), oncology, cardio-vascular, anti-diabetic therapeutic segments. Laurus also has a contract manufacturing business. The firm also has a presence in nutraceuticals and several other products with a customer base that includes several generic pharmaceutical companies in India and abroad. It also has a contract manufacturing business catering to several generic and innovation-driven, global pharmaceutical companies.

Laurus is led by its founder and chief executive officer Satyanarayana Chava, a renowned scientist, with a successful track record in the pharmaceutical sector. He is joined by executive directors Raju S Kalidindi, who has 26 years of experience in pharmaceutical research and operations. The firm has grown rapidly since its first full year of commercial operations in 2008, recording revenues of Rs 1,200 crore in FY14.

“Laurus is at an important juncture in its evolution, having built a strong reputation in product development and manufacturing... We are glad to partner with Warburg Pincus in this phase of our growth,” said Satyanarayana. ‘‘In addition to securing growth capital, we look forward to leveraging Warburg Pincus’ deep domain expertise and global network of relationships to help enter new markets and add to our customer base,” he added

Commenting on the transaction, Niten Malhan, managing director and co-head of Warburg Pincus India, said: “Satya’s focus on innovation and developing a strong organisation has enabled Laurus to emerge as a global leader in the generic ARV API segment and well positioned the company to benefit from its initiatives to enter other attractive segments. Warburg Pincus is excited to be a partner in Laurus’ next phase of growth to become a leading global pharmaceutical company.”

“Through a positive combination of technical depth, relentless execution and highest level of corporate governance, the team at Laurus Labs has built a market-leading pharmaceutical company in a short span of time. We are excited to continue our partnership with the company, and welcome Warburg Pincus to join this exciting growth story.”

Jefferies acted as the sole financial advisor in this transaction.