Ascent takes its second bet with Strides' promoter-led company

To invest Rs 120 cr in Alivira Animal Health

Ascent Capital, the Bangalore-based PE fund with around $650 million under management, will invest Rs 120 crore in Alivira Animal Health, a joint venture between publicly-held companies — SeQuent Scientific and Shasun Pharmaceuticals.

Alivira is involved in developing, manufacturing and the sale of veterinary products including both API (Active Pharmaceuticals Ingredients) and formulations in the global market.

In the terms of the arrangement, SeQuent and Shasun  have made  contributions by way of transfer of identified assets, contracts and licenses. SeQuent owns 73 per cent of the JVC and Shasun will own the remaining 27 per cent.

For Ascent Capital, this is the second bet it is making on Arun Kumar, the promoter of Strides Arcolab, who had last year sold the speciality division of Strides Arcolab to US-based Mylan for a good $1.6 billion. Ascent Capital had also last year invested in Skanray Technologies, a Mysore-based healthcare equipment company in which Arun Kumar is a key investor.
 

According to information available, the board of Alivira has submitted a three-year business plan to Ascent based on which the stake will be decided post that time-frame. “If this JV meets those targets, Ascent Capital will get a small stake, and if not, they get to hold a substantial stake,” senior investment bankers in the know told Business Standard.

SeQuent Scientific during the end of last year had hived off its veterinary formulations business as part of its strategy to drive focus on that business. This business contributes around 40 per cent to the revenues of Rs 350 crore. The company is jointly promoted by Arun Kumar and his close associate K R Ravishankar.

After Arun Kumar monetised the specialities business in Strides, he is understood to be working on aggressively driving the growth of Alivira along with laying a strong foundation for the biotechnology business under Strides Arcolab as well.

Investment bankers close to the promoters indicated that the step to hive off the veterinary formulations business and raising the private equity funding is among the series of measures the company is planning to drive value.

In addition to this business, SeQuent Scientific has a good presence in the human API which contributes another 40 per cent to the revenues. Besides this, SeQuent had a presence in the speciality chemical business catering to the petrochemical business bringing in another 20 per cent to the revenues, which was sold to a Korean company recently.