US-based private equity fund Citi Venture Capital (CVC) has picked up nearly 30% stake in Mumbai-based bulk drug maker Unimark Remedies for Rs 113 crore. The transaction, one of the largest investments in the pharma sector in 2007 and CVC’s first in the pharma sector, is made through its Indian arm — CVC India.
“We have made an investment of Rs 113 crore in Unimark Remedies at a pre-funding company value of Rs 380 crore. It’s a mid-sized company and as PE investors we find value in the investment,” CVC India MD Ajay Relan told ET. When contacted, a Unimark Remedies spokesperson declined to comment. It is learnt that the company is planning to list the company soon.
For the year ended March 31 ‘07, Unimark Remedies had reported total revenues of $90 million or around Rs 360 crore. However, the size of the stake that will be diluted is not known.
Unimark Remedies is focused on manufacturing speciality active pharmaceutical ingredient (API) in cephalosporins, ace inhibitors, anti bacterials, anti-inflammatory, narcotics, oncology products and controlled substances segments. The company also manufactures advanced speciality intermediates.
The company is also hoping to achieve a turnover of Rs 800 crore over the next 3 years by focusing on regulated markets abroad. With most API manufacturers having long-term contracts with leading drug manufacturers, the margins of APIs will be protected. “For a PE investor, an investment in this space makes sense since API manufacturers have price escalating clause with their customers,” said an analyst with Prabhudas Liladhar.
CVC is looking to make investments of nearly Rs 4,000 crore in India over the next 2-3 years. The fund has invested Rs 90 crore in edible oil company KS Oils and has equity stakes is textiles company Spentex, polyester producer JBF Industries and International Tractors Limited.
While sectors like IT and banking have attracted big-ticket PE investments, recent PE deals in the pharma landscape have been made primarily in mid-size pharma companies. Sequioa Capital recently invested Rs 100 crore in Hyderabad-based GVK Biosciences.
It earlier picked a 20% stake in contract research organisation firm Sai Advantium for Rs 47 crore.
Source: Economic Times