Sanjiv Kaul continues multi-bagger pharma returns with Eris' IPO

Earlier, ChrysCapital had successful returns from Mankind and Intas under him

A few years ago when Ajay Piramal was delivering the keynote address at a conference organised by Venture Intelligence in Mumbai, he specifically pointed out to Sanjiv Kaul (who was in the audience amid many 

PE-VC professionals) saying that Sanjiv could relate very well to what he was talking about.

The chairman of Piramal Group bought Nicholas Laboratories in 1988, when it was ranked 48th in the domestic market and turned it into the third largest company through a series of acquisitions. In 2010, he sold the domestic formulation part of the business to Abbott for $3.8 billion (Rs 17,500 crore), at the most expensive valuation of nine times to sales. He is clearly respected for his ability to build as well as make good return on his investments.

Piramal is right on Kaul. With Eris Lifesciences’ initial public offering (IPO) getting three times oversubscribed on Tuesday, ChrysCapital has made another multibagger exit from its investment in pharma. The home grown PE firm that invested about Rs 200 crore in Eris in 2011, is set to make about Rs 1,347 crore through its exit. Reaping close to seven times return.

Kaul, who spent 27 Years in pharmaceutical industry, joined the home grown private equity firm in 2004 and leads its investments for health care and consumer sectors. 

Of his pharmaceutical industry experience, two decades were with Ranbaxy where he held several key leadership positions including country head for China, regional director for India and the Middle East and vice president and head of corporate affairs for Ranbaxy. He was not available to address queries for this story.

“Sanjiv has probably forgotten more about the industry than most finance professionals will ever learn,” says Arun Natarajan, chief executive officer of PE-VC data analytics firm Venture Intelligence. “Clearly, his rich experience and deep relationships in the sector, combined with the firm’s overall financial acumen, has played a large role in the success they have enjoyed,” says Natarajan.

In 2015, Chrys Capital exited Mankind Pharma in a secondary deal worth $203 million to Capital International, getting 13 times return made on $24 million investment done in 2007.

A year prior to that it made over 17 times return by partially selling its investment in Ahmedabad-based Intas Pharmaceuticals for $131 million to Temasek Holdings. It made another exit from Intas this year at a return multiple of 4.6 times in a $106 million secondary deal to a bunch of buyers including Capital International. It had invested in Intas first in 2005 for $12 million and then had followed up with $57 million in 2012.

“Other things being the same, success in pharma investing comes from deep domain expertise in the sector, and being able to take timely calls on new or experimental business models,” says Krishnakumar V, transaction partner (Life Sciences), EY.

Being an insider Kaul brings that extra insight to understand the challenges companies are facing and strategy that they are playing out. As all three investee companies have a strong domestic footprint, where Kaul has an edge in taking investment calls.

The PE firm that is also known for its PIPE deals (private investment in public equity) has seen good returns from its bets in listed pharma companies. It has made 3 to 4 times returns from its investments in companies such as Torrent Pharmaceuticals, Cadila Healthcare and Zydus Wellness.

“Since he has been a part of operations he understands the issues better. That is why he has been able to make smart commercial calls,” say Manisha Girotra, chief executive officer at Moelis & Company in India, who has advised companies where ChrysCapital has been an investor.