Advent International to pick up 50.1% in Suven Pharma for Rs 6,313 crore

Global private equity giant Advent International said on Monday it was buying a 50.1 per cent stake in Hyderabad-based Suven Pharmaceuticals for Rs 6,313 crore, and was planning to merge it with its portfolio company Cohance Lifesciences. The promoter Jasti family will hold only 9.9 per cent stake in the firm if the deal goes through. The deal would be subject to regulatory approvals and conditions.

Advent will launch an open offer for another 26 per cent stake at Rs 495 per share. If the open offer is fully subscribed, Advent will have to pay another Rs 3,276 crore and the total deal size would jump to Rs 9,589 crore.

In a conference call, Suven Pharma Managing Director (MD) Venkateswarlu Jasti said the deal was expected to be closed in five to six months and the details of the proposed merger with Cohance were still being worked out, including what could be the share swap ratio.

Suven Pharma, which was demerged from its parent entity Suven Life Sciences in 2020, is one of the major players in the India pharma contract development and manufacturing (CDMO) space. It has clocked a growth of over 20 per cent CAGR over the last 4 years, and a profitability of over 43 per cent Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins.

Suven Pharma ended Monday’s trade on the BSE at Rs 472 apiece, down 5.2 per cent.

Jasti said there was an 18-month lock-in period for the promoters to hold their residual stake in Suven Pharmaceuticals, although they had no plans to sell it as long as it created value not just for the shareholders but for themselves.

Jasti would cease to be the MD of the company and will provide consultancy services as chief advisor after the deal is completed. The company does around 90 per cent of its business with innovators and has a strong pipeline of Phase 3 and late Phase 2 molecules with over 100 active projects.

Advent intends to explore the merger of Cohance with Suven to build a leading end-to-end CDMO and merchant API (active pharmaceutical ingredients) player servicing the pharma and specialty chemicals markets.

Jasti said they were delighted to bring Advent into Suven Pharma as a strategic investor.

“Advent is the ideal partner for us, with deep expertise in healthcare, and a global network of professionals and experts. Their experience and resources will launch the next phase of growth for Suven Pharma. The proposed collaboration with Cohance is a win-win for Suven and its public shareholders. It will help us offer a broader set of services and multi-sites to our customers.”

The merger will be evaluated by the board taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders and will be subject to regulatory approvals and other customary approvals.

Shweta Jalan, managing partner and head of Advent International in India said, “We are extremely pleased with this win-win transaction…We plan to build on Suven’s capabilities and make it one of the global leaders in the CDMO space. We intend to explore a merger of Cohance with Suven in a manner which is synergistic and accretive for Suven’s shareholders.”

Pankaj Patwari, managing director at Advent International said, “Our vision for Suven is to build a $1-billion global leader, by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development, and scaling up manufacturing and R&D. We will also look at acquiring synergistic businesses globally, to further build capabilities and gain new customer access.”

If approved, Suven and Cohance’s combined entity will have three growth vectors across pharma CDMO, specialty chemicals and merchant API.