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Goldman Sachs Private Equity emerges frontrunner to acquire ChrysCap stake in GVK Biosciences

The CRAMs ( contract research and manufacturing services) segment is fetching rich valuations globally and back home, the segment has seen minority stake sale deals like True North-Anthem Biosciences & TPG-Sai Lifesciences.

April 18, 2021 / 08:57 PM IST
Representative image

Representative image

The private equity arm of Wall Street powerhouse Goldman Sachs has entered the final stage of negotiations to buy out the minority stake held by ChrysCapital in top contract research player GVK Biosciences, people with knowledge of the matter told Moneycontrol.

If talks fructify, this would be the second domestic pure play pharma investment by the Goldman Sachs group. In November 2020, it pumped in $150 million in Kiran Mazumdar Shaw-led Biocon Biologics.

On October 9, 2020, Moneycontrol was the first to report that Chrys Capital was exploring an exit from GVK Biosciences and that other key shareholders may also consider a part stake sale depending on valuations.

“This deal has reached the finish line and the Goldman Sachs group has edged out other private equity rivals. The co-promoters of the target firm, namely GVK group and DS Brar, the former CEO and managing director of Ranbaxy Labs may also sell a part stake and the combined final stake on offer may be higher,” one of the persons cited above told Moneycontrol.

ChrysCapital entered the firm in 2015 when it picked the 10 percent stake held by Sequoia Capital. Back then, the secondary purchase valued GVK Biosciences at $250 million. Pharma industry veteran Sanjiv Kaul is a partner with ChrysCapital and sits on the GVK Biosciences board.

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As of March 2020, the private equity fund held a 16.77 percent stake in the firm. On the other hand, Brar and his family members and the GVK family directly and indirectly held 41.01 percent shares each in the firm as of March 2020.

“CRAMs (contract research and manufacturing services) is a hot space globally and the segment is fetching good valuations. So it’s a good time for ChrysCapital to make an exit. An official announcement on this deal can be expected shortly,” a second person added.

A third individual familiar with the ongoing discussions said Investment bank Jefferies has been mandated for the proposed transaction. “It’s a good business ( referring to GVK Biosciences ) and this segment has seen strong interest from private equity players in the recent past,” this person said.

All the three persons spoke to Moneycontrol on the condition of anonymity.

Goldman Sachs and Jefferies declined to comment in response to an email query from Jefferies. Moneycontrol has sent email reminders to GVK Bio Sciences and ChrysCapital and is awaiting their responses. This article will be updated when we hear from them. Brar declined to comment.

PHARMA & HEALTHCARE: THE PE PUSH

On March 1, 2021, homegrown private equity firm True North said it would acquire a minority stake in Bengaluru-based Anthem Biosciences, an integrated drug discovery, development and manufacturing services provider offering services across multiple platforms, molecule structures, and technologies.

In July 2018, American private equity firm TPG picked a minority stake in Hyderabad-based drug discovery and development firm Sai Lifesciences.

ChrysCapital, one of India’s largest private equity firms and most successful pharma investors, has sealed blockbuster exits in the past from Infosys, Mankind Pharma and Intas Pharma.

Over and above the pure play pharma category, in the domestic healthcare segment, the Goldman Sachs group has previously invested in Bengaluru-based CyteCare Hospitals, infertility treatment chain Nova IVF, BPL Medical Technologies and pharmacy retail chain MedPlus.

GVK BIOSCIENCES: A CLOSER LOOK

GVK Bio is one of the largest contract research organisations (CROs) in India, with a large clientele of more than 450 companies that includes several global pharma players. It offers integrated services across the drug discovery and development value chain, and provides research services in medicinal chemistry and biology to innovator pharma companies.

The firm also manufactures APIs and API intermediates and its annual revenues increased from Rs 795 crore in 2019 to Rs 951 crore in 2020. PAT (profit after tax) rose from Rs 61 crore to Rs 99 crore during the same period.

Drug discovery services are the major revenue contributor, accounting for around 50 percent of the revenue in fiscal 2020. The company has more than 2,200 employees, with facilities in Hyderabad, Bengaluru, and Visakhapatnam, and in Morgan Hill, California.
Ashwin Mohan

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