CVC Capital in talks to restructure Sajjan India’s $350-million acquisition loan

CVC Capital is in talks with lenders to restructure a loan facility of around $350 million, which the private equity firm availed for the leveraged buyout of specialty chemicals company Sajjan India in 2021, sources have told Moneycontrol.

CVC acquired an 89 percent stake in Sajjan India at a valuation of around Rs 7,000 crore in its biggest deal in the Indian market.

CVC’s request to restructure the loan comes as Sajjan India has been facing strong headwinds leading to sharp fall in its revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda). Margins too are under pressure.

“The company’s business is under pressure and its topline and bottomline have fallen significantly from the past financial years. This has put pressure on its ability to generate cash flows to make debt repayments or refinance the loans, ” one of the people cited above said.

A January 7 report by credit rating agency Care Ratings said the company’s revenue fell 30 percent in FY24 to Rs 1,052 crore from the previous year.

The drop in profits is even sharper. FY24 net profit came in at Rs 106 crore, down almost 61 percent from the previous year.

In FY25, the company bought back a 10 percent stake held by one of the former promoters for Rs 219 crore, according to the report, implying a valuation of approximately Rs 2,190 crore, a steep fall from the time of CVC’s majority stake acquisition in 2021.

Private equity firms regularly use debt to acquire companies to improve their overall returns. These transactions are called leveraged buyouts (LBO).

Typically, these loans are paid off either through cash flows of the acquired company or through partial or full sale of the equity in the company.

PE investors may sometimes also refinance such loans depending on how long they plan to hold on to the acquired company or to take advantage of interest rate movement.

An email sent to CVC Capital did not elicit a response.

Sajjan India Business

Sajjan India, now rebranded as Cohizon Life Sciences Ltd, manufactures active ingredients, electronic chemicals, speciality chemicals and intermediates for agrochemicals, pharmaceuticals, dyes and pigments.

Care Ratings said while the long-term prospects of the sector remain promising, the global agrochemical sector has been facing challenges since H2FY23.

“These challenges primarily stem from increased channel inventory which affected the demand from export market and pricing pressure caused by China’s aggressive dumping,” the report said.

The company derives 90 percent revenue from the agrochemical industry, followed by specialty chemicals.

“Customer concentration is high with the top 10 customers contributing ~79 percent revenue in FY24. Product concentration risk persists with the top 8-10 products continuing to contribute substantially to Sajjan India’s revenue,” as per the Care Ratings report.

CVC in India

CVC’s most prominent investment in India has been the acquisition of the Indian Premier League (IPL) franchise Gujarat Titans.

It acquired the Gujarat Titans team in 2021 for Rs 5,625 crore. CVC is in talks to sell the IPL franchise. 

The PE firm is also in talks to sell its 60 percent stake in cancer hospital chain HealthCare Global Enterprises, which it acquired in 2020 for Rs 1,049 crore.

In August 2024, CVC emerged as the winning bidder to acquire Kedaara Capital and Partners Group’s 26.47 percent stake in Aavas Financiers, valuing the lender at Rs 13,000 crore.