Leading global private equity fund Advent International, which is spearheaded by Shweta Jalan in India, has initiated the merger process for its portfolio companies Suven Pharmaceuticals and Cohance Lifesciences and has picked two advisors for the proposed deal, multiple industry sources in the know told Moneycontrol.
"Via the merger, Advent seeks to create a top end-to-end CDMO and merchant API firm which caters to the pharma and specialty chemical markets. Recently investment banks Kotak Mahindra Capital & Citi have been mandated as advisors," one of the sources said.
CDMO stands for contract development and manufacturing organization and API is active pharmaceutical ingredients.
According to a second person, “Work has begun on the transaction and going ahead the advisors will look at aspects like the merger swap ratio, fairness opinion and due diligence.”
When contacted, Advent International and Suven Pharmaceuticals declined to comment; Citi and Kotak Mahindra Capital are yet to respond to Moneycontrol’s queries.
On December 26, 2022, Advent International announced the acquisition of a majority stake in Suven Pharmaceuticals from the Jasti family. The private equity firm added that post the completion of the acquisition, it intends to explore the merger of Suven Pharmaceuticals and Cohance Lifesciences.
"The merger will be evaluated by the board taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders and will be subject to regulatory approvals and other customary approvals," the announcement elaborated.
Suven Pharmaceuticals is a listed CDMO with a market cap of Rs 15,816 crores at the end of days trade on 7th February. On the other hand, Cohance Lifesciences is an unlisted platform which was formed to create a new brand entity for three formerly acquired companies, RA Chem Pharma, ZCL Chemicals, and Avra Laboratories in the API and CDMO space.
It was set up by Advent to help streamline the businesses along formulations and clinical research lines, providing an end-to-end offering to its customers.
Suven Pharmaceutical reported a sharp decline in its net profit, revenue, and profitability in Q3.
"Near-term macro challenges persist due to industry-wide inventory de-stocking in Specialty Chemicals and impact of Covid Molecule in CDMO. This is likely to keep our next few quarters' performance soft. We remain confident about our medium term," Suven Pharmaceuticals said in its Q3 investor presentation.
In related deal activity in the segment, on January 25, Moneycontrol was the first to report that US-based private equity major Bain Capital has emerged as the likely front-runner to acquire a majority stake in TPG Capital-backed Sai Life Sciences.
The proposed transaction is expected to value the Hyderabad-based contract research, development, and manufacturing organisation (CRDMO) target at around $800 million, in one of the biggest deals in the niche segment, the report added.
Additionally, according to a report by the Economic Times dated January 31, Abu Dhabi Investment Authority (ADIA) and UK-based private equity firm HarbourVest have held discussions to acquire a minority stake in Cohance Lifesciences.
A Closer Look At Advent
Founded in 1984, Advent International is one of the largest and most experienced global private equity investors. The firm has invested in over 410 private equity investments across 42 countries, and as of March 31, 2023, had $95 billion in assets under management.
The firm focuses on investments in five core sectors, including business and financial services; health care; industrial; retail, consumer and leisure; and technology.
In 2024, Advent is also set for value unlocking via stake sales in two key portfolio companies.
Notably, the firm is exploring strategic options to unlock value in India's largest rigid plastic packaging firm Manjushree Technopak.
Moneycontrol was the first to report that Advent International has initiated preliminary steps to explore a sale of top biopharmaceutical firm Bharat Serums and Vaccines.
Other than Suven Pharma, Cohance, Manjushree Technopak and Bharat Serums & Vaccines, the India portfolio of Advent includes KreditBee, Yes Bank, Tredence, Eureka Forbes, Aditya Birla Capital, DFM Foods and Modenik.
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