The private equity arm of Goldman Sachs, is all set to acquire about 33% stake in Hyderabad-based GVK Biosciences, making pharma & healthcare as the favourite investment destination amid Covid pandemic, ET reported on Monday.
In January, ET first reported that bulge bracket private equity funds including a fund managed by Goldman Sachs Inc have been shortlisted for acquiring minority stake in GVK Biosciences.
The other contenders who were in the race include Carlyle Group, Warburg Pincus, General Atlantic and Quadria Capital and Singapore’s Temasek Holdings.
The deal will value Aragen, co-promoted by the GVK Group and DS Brar, the former CEO & managing director of Ranbaxy Laboratories, at Rs 7300 crore ($1 bn), ET reported.
Existing shareholder Chryscapital will sell its 17% stake along with promoters who will dilute about 16% stake in Aragen.
Aragen is a leading provider of outsourced discovery, development, and manufacturing services across both large and small molecule platforms. The company serves a worldwide customer base which spans to the United States, Europe, and Japan, the statement added.
Started in 2001 by Sanjay Reddy, Aragen (formerly GVK BIO) saw the entry of DS Brar in 2004 as promoter & chairman. Brar& family, Reddy & family together hold more than 80% stake in GVK BIO. Aragen competes with Biocon-backed Syngene International.
For FY2020, Aragen posted a revenue of Rs.950 crore, with an EBITDA of Rs.275 crore. Half of its revenue comes from drug discovery research while CRAMS (contract manufacturing) that includes active pharmaceutical ingredients (APIs) contributes the rest.
In 2014, GVK BIO acquired Aragen Bioscience, Inc., a US-based preclinical CRO specialising in biologics services, and the merger was completed in 2017.
“We believe this new investment at this important juncture in our company’s development underscores the tremendous opportunity ahead. Working with Goldman Sachs, we are well-positioned to address the opportunities in front of us to become a leading, global player with comprehensive end-to-end solutions for drug discovery and development,” said Manni Kantipudi, CEO of Aragen Life Sciences.
Aragen employees over 3,000 professionals globally and serves more than 450 life sciences customers across biotech and large cap companies. “Aragen is well positioned to benefit from the secular trend of increased outsourcing by the life sciences industry,” said Rajat Sood, managing director at Goldman Sachs Asset Management. Goldman Sachs is actively seeking to invest and foster leading, national champions of India who are building companies of a global scale, he added.
Goldman Sachs is an active investor in India, deploying more than $3.6 billion in capital since 2006.
Goldman’s previous investments in Indian healthcare include Biocon Biologics, BPL Medical Technologies, CyteCare Hospitals, Max India and Nova Medical Centers.
“We are proud to have seen Aragen grow and scale from providing discovery services to successfully expand into development and manufacturing, as well as biologics,” said Raghav Ramdev, Managing Director at ChrysCapital.
The global Contract Research Organization (CRO) services market is expected to cross $70 billion by 2025 from $47 billion in 2020. The pharmaceuticals contract manufacturing market in India comes to about $9 billion in 2019 and is expected to reach $23 billion by 2025.