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ChrysCapital to sell 10% in drug maker Intas Pharmaceuticals to Temasek for over $160 million

Temasek has bought 12.5% stake in Intas Pharmaceuticals, one of India's top 10 drug makers by sale, for a little over Rs 1,100 crore, people involved with the development said.

, ET Bureau|
Updated: Jun 03, 2014, 01.54 PM IST
The deal is a secondary share purchase from ChrysCapital - translating to a 24 times profit for the latter - and is one of the best gains reported by any private equity investor of scale in India.
The deal is a secondary share purchase from ChrysCapital - translating to a 24 times profit for the latter - and is one of the best gains reported by any private equity investor of scale in India.
MUMBAI: In what would be one of the most profitable recent exits in Indian private equity, ChrysCapital is selling its stake in drug maker Intas Pharmaceuticals at nearly 20-fold returns. According to sources, Temasek has emerged as frontrunner to pick up the stake valuing the Ahmedabad-based company at Rs 8,800 crore.

Others, such as Capital International and Goldman Sachs, were also in the fray for the deal finally clinched by the Singapore sovereign wealth fund, which is expected to pick up over 10% stake in the company. The deal size has been pegged at about $160-170 million, or Rs 950-100 crore.

The transaction comes at a time when PE industry is struggling with exits due to factors like a tepid IPO market and depreciating currency. "It's a significant and great news for PE Industry, given emergence of secondary deals as a viable exit route and the exit value," said Raja Lahiri, partner for transaction advisory services at Grant Thornton.

The deal is now awaiting clearance from Foreign Investment Promotion Board, the nodal body on clearing foreign direct investments in India. Jayesh Shah, CFO at Intas Pharmaceuticals, confirmed talks with Temasek but declined to comment on transaction details.

"I cannot comment on valuation right now as the deal is not yet signed. But we have filed with FIPB, and the process is going on," he said.

"Temasek has a policy of not commenting on market speculation and rumours," said a representative over email. Temasek has earlier backed Indian pharma companies like Matrix Laboratories, where it made a profitable exit on sale of the company to Mylan in 2006. It is also a shareholder in Bangalore-based Medreich, where it invested in 2005.

ChrysCapital spokesperson did not reply to calls made. ChrysCapital first invested in Intas Pharma through its Fund III, picking up 12.5% stake for Rs 53 crore which has got diluted 10.15%. Then it invested in Intas Pharma again through its Fund V, picking up 6.25% in the company for Rs 300 crore after its IPO did not take off.

The PE firm had to exit as the life of its Fund III, which raised $258 million in 2004, was coming to a close but will continue to hold over 6% stake through Fund V.

For ChrysCapital, the largest private firm in India with $2.5 billion under management, the exit would join the list of its other home runs like wind turbine make Suzlon and vehicle financier Shriram Transport Finance where the firm made 10-12 times capital invested. Intas was one of the first investment in pharma sector for ChrysCapital after the PE firm roped in Sanjiv Kaul, former senior Ranbaxy executive.

Intas Pharmaceuticals, which was set up in, saw its topline go up 29% to Rs 3,562 crore with PAT increasing 35% to Rs 389 crore in fiscal 2013 compared with the previous fiscal. While Shah declined to disclose the latest financials, he said Intas is seeing 20-25% growth.

Intas had filed for an IPO two times, once in 2011 and then again in 2013 but could not go ahead due to weak capital markets. One source also said that the company could look at an overseas listing in markets like USA in a couple of years.

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