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October 15, 2020 VCCIRCLE

Global PE Fund PAG-led Pharma API Platform acquires controlling stake in Anjan Drug

PAG-led consortium to acquire majority stake in Anjan Drug

Hong Kong-based alternative investment firm PAG Asia Capital and its consortium partners CX Partners and Samara Capital have agreed to acquire a controlling stake in bulk-drugs maker Anjan Drug Pvt. Ltd.

The acquisition is part of the PAG-led consortium’s strategy to create a platform for the development and production of active pharmaceutical ingredients (APIs), the firm said in a statement. It didn’t disclose financial details of the transaction.

The development comes after VCCircle reported in August that the consortium was chasing this deal. In fact, VCCircle reported as early as December last year that CX Partners and Samara had teamed up to invest in bulk-drugs companies and that the two homegrown private equity firms were in talks with a few companies including Anjan Drug.

Nikhil Srivastava, managing director and head of India private equity at PAG, said the acquisition of Anjan Drug is a key first step to create a platform for APIs in India. APIs, or bulk drugs, are used to make finished medicines.

The platform, called Gamot API Pte Ltd, is registered in Singapore. It plans to develop a high-quality, diversified portfolio of products with a solid client base and a broad range of technical expertise, said Srivastava, a former KKR executive.

PAG has previously, too, shown interest in acquiring pharmaceutical assets. It was one of the bidders for JB Chemicals & Pharmaceuticals Ltd, before KKR & Co last month agreed to acquire a majority stake in the company.

PAG, which was earlier known as the Pacific Asia Group, is currently investing out of its third pan-Asia buyout fund which had raised $6 billion in commitments.

In August, it announced the acquisition of a majority stake in Edelweiss Wealth Management.

Investment bank Veda Corporate Advisors advised Anjan Drug on the deal.

Anjan Drug

Anjan Drug, established in 1990 by C Kalaichelvan, manufactures APIs for central nervous system disorders such as anxiety, depression, epilepsy and schizophrenia.

The PAG-led deal will mark the Chennai-based drugmaker’s second stint with private equity firms.

Previously, Evolvence India Life Sciences Fund, the debut healthcare fund managed by private equity firm InvAscent, had committed to invest Rs 25 crore in Anjan Drug in 2009 in tranches. The fund exited the company in 2018.

Anjan Drug reported net sales at Rs 163.02 crore for the year through March 2019 as compared with Rs 150 crore in the previous year, according to VCCEdge, the research arm of Mosaic Digital. Its operating profit jumped to Rs 44.76 crore from Rs 42.6 crore.

The deal comes at a time when the API segment in India is gaining traction. Indian drugmakers depend on Chinese suppliers for nearly two-thirds of their API requirements but have been ramping up their own production of late. This has increased the interest of PE firms in the segment.

The trend has gained momentum after border tensions between the two countries erupted in June, prompting India to tighten scrutiny over trade and investment flows from China.

In July, Advent International agreed to acquire a controlling stake in RA Chem Pharma Ltd from Bengaluru-based Micro Labs Ltd.

The Carlyle Group is also working towards building an API platform, several media reports have said. Carlyle is acquiring a majority stake in SeQuent Scientific Ltd, which makes animal healthcare APIs, and has also bought a 20% stake in Piramal Pharma Ltd in its biggest healthcare deal in India.