Ontario Teachers and Chrys Capital team up to bid for Healthium Medtech

Ontario Teachers and Chrys Capital team up to bid for Healthium Medtech

Ontario Teachers Pension Plan (OTPP) is teaming up with domestic private equity firm, Chrys Capital, to acquire Healthium Medtech, one of the leading manufacturers of surgical sutures globally, sources aware of the matter said.

OTPP, which is one of the world’s largest pension funds, will jointly bid for the company which has been put on the block by Apax Partners, a UK headquartered private equity fund. The transaction is likely to be upwards of Rs 6,000 crore which is almost a three-fold jump in valuation from the acquisition price that Apax Partners paid while acquiring the company in 2018 from TPG Capital. Notably, Apax Partners was also exploring an IPO initially for the company but has now decided in favour of a private sale, the sources said.

Big funds line up 

In addition to the OTPP-Chrys capital combine, global bulge bracket PE names such as Blackstone, Bain Capital, and the Carlyle Group are also in the fray and a formal round of bidding is expected to begin in the coming weeks, sources said.  Apax acquired Healthium, the fourth largest sutures manufacturer globally, in 2018 from TPG and other shareholders for around Rs 1,950 crore. Apax owns a 99.8 percent stake in the company.

Email queries sent to OTPP, Chrys Capital remianed unaswered. Apax Partners, Blackstone, Bain Capital and the Carlyle group declined to comment.

Healthium, earlier known as Sutures India Pvt Ltd, manufactures and sells wound closure products such as absorbable and non-absorbable sutures, mesh, tapes, skin staplers, ligation clips and other medical consumables such as surgical gloves, tubular bandages and catheters. These products are exported to over 90 countries in Europe, South America, Africa and Asia. The company and its subsidiaries have seven manufacturing facilities with three R&D centres.

“Preliminary talks are on with these investors and non-binding bids are expected to be submitted in a few weeks,” said one of the sources cited above. The sale could fetch a valuation in the range of Rs 5,000 crore to Rs 6,000 crore.

For H1 FY24, Healthium reported a revenue of Rs 393.4 crore and it reported a profit of Rs 68.9 crore, as per a January 31 credit rating report from rating agency ICRA.

Steady growth 

Healthium reported a revenue of Rs 728.5 crore in FY23, while recording a profit of Rs 112.9 crore, excluding a one-time gain of Rs 490.3 crore from the sale of a subsidiary. In FY2023, the company divested its UK business, the Clini group specialising in the urology segment, to American PE fund KKR, which resulted in net proceeds of Rs 762.4 crore.

The Indian market contributed to ~55 percent of its total sales in FY2023 on a consolidated basis.“Healthium, on a consolidated basis (excluding the discontinued UK business), witnessed a revenue growth of 14.3 percent to Rs 728.5 crore in FY2023 from Rs 637.1 crore in FY2022, supported by healthy demand from the key end-user industry segments for wound closure, both in the domestic and export markets. Revenue growth was majorly supported by volume growth on the back of a strong distribution network in the domestic markets, new product launches and established relationships with existing clients,” the ICRA report said.

Attractive market 

India’s surgical sutures market will grow at a compounded annual growth rate of over 13 percent to reach $ 380 million in 2030, as per GlobalData’s report ‘India Surgical Sutures Market Share’. Ethicon Inc, Arthrex Inc, and Covidien Holding Inc are some of the global players in this surgical sutures market.

“The company (Healthium) is the second-biggest player in the surgical sutures segment in India and the largest in the surgical needles space globally by volume. However, the Indian market for sutures is primarily dominated by Johnson & Johnson through its brand, Ethicon. In addition, the company faces competition from other international as well as domestic players in other product segments, which restricts its margins to a certain extent,” ICRA noted in its report.

Apax Partners has raised over $65 billion for its various funds across strategies such as buyout, digital growth, impact and credit. Apax invests in technology, services, healthcare and consumer internet businesses.