Secondary private equity transactions seem to be on the rise in India's healthcare space. Capital International, a global private equity (PE) fund, is learnt to be in talks to acquire a 11 per cent stake in Delhi-based Mankind Pharma for Rs 1,300-1,500 crore. This secondary deal could see PE firm ChrysCapital exiting its seven-year-old investment.
According to people in the know, besides Capital International, at least two other leading PE investors have evinced interest in buying the stake in Mankind Pharma, which earned a revenue of Rs 3000 crore in 2013-14. The company is learnt to be valued at four-five times its sales. ChrysCapital, which had invested $24 million (at Rs 40 a dollar) in 2007, is expected to get returns of more than five times.
At present, Mankind Chairman R C Juneja and family hold an 89 per cent stake in the pharma company, while ChrysCapital owns 11 per cent. The promoters, it is learnt, have no plans to sell more stake to the new PE investor.
When contacted, ChrysCapital Managing Director Sanjiv Kaul said: "The unsolicited and pre-emptive offers that were received by ChrysCapital have been forwarded to the promoters of Mankind." Chuck Freadhoff, a spokesperson for the Capital Group said: "We cannot comment on any business discussions Capital International PE might or might not be having with any firm."
Mankind was established in 1995 by R C Juneja and brother Rajeev Juneja (who is the chief executive), with an investment of Rs 50 lakh. The company has a strong presence in India's over-the-counter (OTC) space with brands like Adiction (deodorants for men), Gas-O-Fast (sachet for gas and hyperacidity), Manforce (condoms), Prega News (pregnancy test kit), Kaloree 1 (artificial sweetener), Heal-O-Kind (anti-bacterial balm) and Unwanted-72 (emergency contraceptive).
About 90 per cent of its business comes from prescription medicines.
About three years ago, a clutch of multinational pharma majors like Pfizer had offered to acquire Mankind Pharma at a valuation of $2 billion. But the deal did not go through as the management was not keen for a sell-out, people in the know said.
ChrysCapital has so far invested more than $2.5 billion in India. In November last year, it part-exited from Intas Pharma, selling about 10 per cent to Singapore's sovereign fund Temasek for an estimated Rs 900 crore. ChrysCapital, which had invested Rs 350 crore in Intas, still holds a six per cent stake. Besides Mankind and Intas, the PE firm's pharma & healthcare investments include those in Zydus Cadila, Eris Lifesciences, Ipca Labs and Torrent Pharma.
Capital International has an exposure to India through its investments in L&T Financial Holdings, Deccan Aviation, Manipal Global Education Services, Multi Screen Media and MindTree. In 2012, it closed an emerging markets fund at $3 billion. The company has been investing in emerging markets since 1992.
A PIECE OF MANKIND
Established in 1995 by R C and Rajeev Juneja
Top products it sells: OTC brands Adiction, Manforce condoms, Unwanted-72
Investments: ChrysCap invested $24 mn in 2007 for a 11% stake
Annual revenue*: RS 3,000 cr
Current value: Rs 15,000 cr