India's Concord Biotech gets PE investment valuing it at $373M

Ahmedabad-based Concord Biotech has sold a 20% stake in itself to the private equity fund Quadria Capital for about $75 million with the investment valuing the bulk-drug maker at about $373 million, according to a report from Livemint in India. The deal is expected to close by the end of January.

Rakesh Jhunjhunwala

Concord's shares have changed hands several times since 2005 when Hyderabad-based Matrix Lab bought 58%, selling that stake back to Concord and Rare Enterprises in 2006 when Mylan ($MYL) acquired Matrix. Rare Enterprises is an asset management firm owned by Rakesh Jhunjhunwala, a high-profile Indian stock market investor, who raised his stake in Concord to 25% when Matrix sold back its stake.

He now holds about 30% in Concord. Jhunjhunwala will remain the single largest shareholder after the most recent deal, according to the report.

Concord was established in 2000 by a former director of Ranbaxy Laboratories and commercialized drugs covering several areas including oncology, antifungal, antibacterial and biosimilars. The company has a global footprint.

The fund is believed to have some level of backing from by Malvinder Mohan Singh and Shivinder Mohan Singh who sold their stake in Ranbaxy to Daiichi Sankyo in 2008 in an overall deal of more than $4 billion. But neither is listed as a partner or backer on the fund's website. The fund did not respond to an email by press time.

This is the first deal from the $304 million Quadria Capital Fund. The private equity fund is based in India and Singapore and invests in midsized healthcare companies in South and Southeast Asia.

India's healthcare sector is attractive to private funds because several have exited with big paydays. In November 2014, ChrysCapital sold 10.16% in Intas Pharmaceuticals to Temasek for $131 million, and in May 2015, ChrysCapital sold its stake in Mankind Pharma to Capital International Private Equity Funds for 10 times what it originally paid, according to the Livemint report.

The government of India is also working to make biotech a key investment target for foreign investors. Government figures show the sector will grow up to 30% annually and reach $100 billion by 2025.

The country has divided the sector into 5 major segments that include biopharma, bioservices, bioagri, bioindustrial and bioinformatics.

The biopharmaceutical sector accounts for about 64% of total revenue, with bioservices contributing 18%, bioagri contributing 14%, bioindustrial accounting for 3% and bioinformatics at 1%, according to government data.

In order to drive more investment in the biotech sector, the government is also rolling out various incentives such as refunds on duties paid on scientific equipment, tax deductions or exemptions on R&D spending, and a venture capital fund to support small and medium-sized enterprises.

In November, Indian officials reported they were ramping up efforts to create at least 1,500 startups over the next two to three years in the biotech sector.

- here's the report from Livemint

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