 "Shanghai Fosun seals Gland Pharma deal")
Shanghai Fosun Pharmaceutical, a leading Chinese health care provider, has signed an agreement to buy 86.08 per cent of the equity in Hyderabad-based Gland Pharma for $1.26 billion (nearly Rs 8,500 crore).
This values the Indian generic injectable pharmaceutical products company, backed by global private equity giant KKR, at $1.46 billion.
P V N Raju, the founder of Gland, and his son, Ravi Penmetsa, will continue to be on the board of directors. The latter will also continue as managing director and chief executive officer (CEO). The promoter family, along with KKR, owned 96 per cent stake in the company. Shanghai Fosun is to purchase a 37 per cent stake of Gland from KKR Floorline Investments, in addition to about 49 per cent stake owned by the promoter family. The latter will retain its remaining 10 per cent, while KKR exits.
"This transaction demonstrates the strong expertise of our people and the potential for Indian companies to improve health care in markets worldwide. We look forward to continuing our work, to research, develop and provide medical products from India, and continue to add capacity at our facilities,” said Penmetsa.
KKR invested in Gland in 2014. Since then, the company has seen its capacity and profit grow significantly. This was achieved, in part, by Gland Pharma’s investment in a new manufacturing plant, enhanced spending on research and development, and in acquiring additional intellectual property.
In 2014, KKR had invested around $200 million (Rs 1,350 crore) to buy the stake in Gland from Evolvence India Life Sciences Fund. The deal had valued the company at about $550 million. The PE giant's exit at a valuation of $1.46 billion means it has nearly tripled on its investment in about 30 months.
Since late last year, the promoters and KKR were trying to exit at a $1.5-billion valuation, and had mandated investment bank Jefferies to run a formal sale process.
This is KKR's second big exit in India this year. In March, it sold its 80 per cent stake in Netherlands-based Alliance Tire Group, promoted by Indian entrepreneur Yogesh Mahansaria, to Yokohama Rubber in a deal that valued the company at $1.2 billion. KKR had invested in Alliance Tire in 2013 at a valuation of $600 million.
"These deals show the growing confidence of global strategic buyers in Indian companies' manufacturing abilities," said Sanjay Nayar, CEO of KKR India. "Continuing interest of these buyers means more PE investments will come to India to help manufacturing companies achieve global standards and boost the government's Make in India efforts."
In financial year 2014-15, Gland had revenue of Rs 994 crore. Also, earnings before interest, depreciation, amortisation and tax of about Rs 346 crore, and net profit of Rs 209 crore. Established in 1978, it developes and manufactures generic injectables, primarily for the American market. It also sells in India and other semi-regulated markets. Its manufacturing facilities are approved by the US and UK drug regulators.
“The deal will greatly strengthen Fosun Pharma’s global presence and accelerate our speed of internationalisation. It will enable us to provide more high-quality products and services to our patients worldwide,” said Chen Qiyu, chairman of Fosun.
PE giant Advent International, US drugmaker Baxter and domestic rival Torrent Pharmaceuticals were also contenders for Gland Pharma. In fact, Indian injectable makers have been attracting foreign buyers in recent years. In 2013, Bengaluru-based Strides Arcolab sold Agila Specialties, its injectable drugs unit, to US-based Mylan for $1.75 billion. The global market for injectables was estimated to be around $300 billion in 2014, with the US accounting for around 35 per cent.
The Chinese “Warren Buffet”
GUO GUANGCHANG, 49, is the founder of Fosun International Limited, the parent company of Shanghai Fosun Pharmaceutical. An MBA from Fudan University, Shanghai, he founded the group in 1992, along with four other fellow graduates.
Initially, the company invested in pharmaceuticals and real estate, but now the group’s interest spans insurance, industrial operations, real estate, media and asset management, earning Guangchang the moniker “Warren Buffet of China”.
Besides its latest India acquisition, the group has international investment French holiday group Club Mediterranee, Greek fashion brand Folli Follie and the Change Manhattan building in New York.
The tycoon reportedly went missing late last year when the Chinese authorities detained him for investigation into his “private affairs”, according to a company statement. He, however, reappeared at the company’s board meeting a week later.
Initially, the company invested in pharmaceuticals and real estate, but now the group’s interest spans insurance, industrial operations, real estate, media and asset management, earning Guangchang the moniker “Warren Buffet of China”.
Besides its latest India acquisition, the group has international investment French holiday group Club Mediterranee, Greek fashion brand Folli Follie and the Change Manhattan building in New York.
The tycoon reportedly went missing late last year when the Chinese authorities detained him for investigation into his “private affairs”, according to a company statement. He, however, reappeared at the company’s board meeting a week later.
