US fund Platinum in talks to buy Inventia Health

US buyout fund Platinum Equity Advisors is in talks to acquire Mumbai-based contract drugmaker Inventia Healthcare at a valuation of ₹2,500 crore ($300 million), multiple people aware of the development told ET.

Existing investors InvAscent Capital and Jacob Ballas that together hold 40% stake in Inventia are set to exit their investments while promoter Janak Shah and family, which own the rest of the stake, will retain a minority stake and manage the business, the sources said.

"The existing private equity funds are evaluating an exit and hence, there is a process being run to facilitate their exit," Ankur Shah, director at Inventia Healthcare, said. "The process is now at a diligence stage with a number of potential parties involved in the diligence process including private equity funds," he added without naming any company. Post the transaction, the promoter family intends to be in charge and continue to lead the company, Shah said.


Mails sent to Platinum Equity did not elicit any responses as of press time on Sunday.

Rothschild & Co and healthcare-focused investment bank Stifel Financial Corp (Torreya) are running the sale process of Inventia and have sounded out a few large private equity funds, as ET first reported in October.

Founded in 1995, Platinum Equity is a global investment firm with approximately $47 billion of assets under management and a portfolio of 50 operating companies. Recently, Platinum had hired Amit Sobti as head of Asia to expand its presence in markets like India. Once materialised, Inventia buyout would be their debut private equity deal in India.

Founded in 1985, Inventia develops value-added oral dosage formulations on a contract manufacturing basis for various Indian and global pharmaceutical companies.

It is likely to post a revenue of ₹700 crore with an Ebitda of ₹150-₹175 crore for FY24, sources cited above said. The company has a portfolio of 340 finished and semi-finished products that mainly cater to the gastrointestinal, diabetic, central nervous system, and other therapeutics.

"IHL's customers include large pharmaceutical players across various regions, with no customer contributing over 15% to the total revenue," India Ratings said in a recent report. "Furthermore, the company has definitive agreements with its customers," it said.

The company has a weak competitive position due to the nature of the contract research business and manufacturing services operations, and its limited bargaining power due to lack of long-term contracts. Given the highly regulated nature of the pharmaceutical industry, any adverse regulatory challenges could affect its credit profile, the report added.

In 2018, Inventia had filed draft papers to raise an estimated ₹450 crore through an initial public offering. The proposed IPO comprised fresh issuance of equity shares worth up to ₹125 crore, besides an offer of sale where promoters Janak Shah and Maya Shah and private equity fund Jacob Ballas were supposed to sell shares. However, the IPO plan got postponed.

The company operates in various geographies, including the US, UK, Saarc and Latin American countries. It conducts research and development (R&D) works at its laboratory in Thane, Maharashtra, while manufacturing takes place at its Ambernath facility, approved by the US Food and Drug Administration and UK MHRA.

Contract research and contract development and manufacturing in India is one of the fastest growing areas. As part of reducing cost by 20-25%, most global and large Indian players depend on CDMO players in India for manufacturing final products. About 70-75% of drugs sold in India is manufactured by CDMO players, according to reports.