NEW DELHI: Carlyle Group portfolio companies Sequent Scientific and Viyash Life Sciences are in advanced talks for a potential Rs 7,000-8,000 crore merger, according to people familiar with the matter. Boards of both companies are likely to discuss the possibility in the coming week, according to those cited. There is no certainty a transaction will materialise, they said.
Sequent is listed and Viyash isn’t. Viyash generated 1.5 times the operating profits of Sequent in FY24, said the people quoted above, adding that the two are exploring the merger due to possible back-end synergies.
ET first reported the story online on Thursday.
Carlyle, Sequent and Viyash didn’t respond to queries.
Manufacturing Capacity
In a similar deal in February, listed Suven Pharma had merged with unlisted Cohance Life Sciences. Private equity firm Advent was a shareholder in both.
Sequent Scientific, which is in animal health business, posted revenue of around Rs 1,400 crore in FY24. It had earnings before interest, tax, depreciation and amortisation of Rs 100 crore. It has seven manufacturing sites in India, Spain, Brazil and Turkey.
Viyash was founded in February 2019 by Hari Babu, formerly the chief operating officer of the world’s largest generic drug maker, Mylan, now known as Viatris. Viyash posted FY24 revenue of Rs 1,400 crore with ebitda at Rs 150 crore.
Viyash has 10 manufacturing plants, including one in New Jersey, US. It is a manufacturer of active pharmaceutical ingredients (APIs) and formulations for drugs in the human health segment.
Sequent, under its previous promoter Arun Kumar, owned a human API business, which was spun off because the company didn’t have the capital to grow that business though it was profitable. In an April 2017 deal, Sequent Scientific and Strides Shashun, another of the companies promoted by Kumar, demerged their respective API businesses into Solara Active Pharma Sciences.
Sequent Scientific’s sales are evenly split between Europe and emerging markets while Viyash has a growing US presence. The latter’s manufacturing capacity could be an advantage for Sequent, according to those close to the merger talks.
Carlyle has invested $6.7 billion across 45 deals in India so far. This includes stakes in Yes Bank and Hexaware Technologies. In the past, it has been an investor in SBI Life Insurance and SBI Cards and Payment Services.
Apart from Carlyle and Advent, several private equity firms have made bets in India’s pharmaceuticals space, such as KKR, ChrysCapital, TA Associates, TPG Capital, Kotak Private equity and Warburg Pincus.
Some have had significant success. For instance, KKR’s investment in Gland Pharma more than doubled in three years. It invested $200 million in 2013 and exited in 2016 when the company was acquired by China’s Fosun, bagging over $500 million for its stake.
Similarly, ChrysCapital invested in Mankind Pharma in 2007 and sold out for around $200 million in 2015, realising a 10-fold return. It then re-invested in the company, writing a cheque of $350 million in 2018 at a valuation of $3.5 billion, when the company was still unlisted. When it finally exited the investment this year, Mankind was valued at over $10 billion.
Credits – Source – https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/carlyle-group-portfolio-companies-in-advanced-talks-for-a-potential-merger/articleshow/113715699.cms