ChrysCapital looking to acquire pharma firms : Report

ChrysCapital focuses on agreements in the formulation sector with the top 20 to 50 rated Indian firms.

Home-grown private equity group ChrysCapital is looking to buy pharma firms in the $200 million- $500 million range. Along with partners, deal sizes can potentially reach $1.5 billion, a a senior executive told The Economic Times.

“We’re looking at buyouts. These can be companies in the top 30-75 in their category. We will look at the $200 million to $500 million range,” Kshitij Sheth, MD of ChrysCapital told ET in an interview.

Sheth said the aim is to grow these companies to “$1.5-$2 billion valuations and take them public eventually. While we could consider a strategic sale, the goal will be to take these platforms public,” the report quoted him as saying.

ChrysCapital focuses on agreements in the formulation sector with the top 20 to 50 rated Indian firms. The PE company has concentrated on purchasing non-controlling stakes in pharmaceutical businesses. For larger purchases, ChrysCapital may collaborate with a sovereign fund, a strategic fund, or another sizeable firm, it added.

“Any of those three combinations would work for us as a partner. But a partner that can put in as much capital as we can, if not more. Because for us, we focus on industries. We’re industry experts. We understand it inside out. We’ll tell you whom to hire, what strategy to deploy, what acquisitions to target, all of that. Sometimes, we don't have the ability to write a huge cheque size. That's when we take in partners that are like-minded and think the same way,” he said.

ChrysCapital is open to acquiring export-led companies in niche therapies like gynaecology, ophthalmology and oncology, along with active pharmaceutical ingredient, contract development and manufacturing organisation, vaccines, and injectable companies, Sheth said, though local formulation will remain a major focus area.

Also read: ChrysCapital invests $100 mn in Centre for Sight, purchases Mahindra Holdings' complete stake

The company recently lost out to KKR in the acquisition of Apax Partners' Healthium Med Tech.

With 15 investments totalling over $1 billion made over the past 15 years, all of which produced outstanding returns, ChrysCapital has been one of the leading PE investors in Indian pharmaceuticals.

It has previously made profitable investments in Torrent Pharma, Mankind, Intas, and Zydus Cadila.

ChrysCapital has sold 10 of the fifteen assets, resulting in a cumulative return on invested capital (ROIC) of more than 3.6 times and an internal rate of return (IRR) of 31 percent in US dollars.