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Cabinet clears KKR’s proposal to acquire stakes in two pharma companies

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The government today cleared private equity major KKR’s proposal to acquire stakes in two pharmaceutical companies in deals worth over Rs 1,400 crore, including 38 per cent stake buy in Gland Pharma.

The two deals are estimated to be worth Rs 1,434 crore, sources said.

In the first proposal, the Cabinet, in its last meeting under PM Manmohan Singh, cleared KKR  Investments PTE Ltd’s acquisition of stake in Hyderabad-based Gland Pharma through a combination of primary investment into the company and share purchase from EILSF, an existing investor.

The private equity major is to snap up 37.98 per cent stake in Gland Pharma. Besides, the Cabinet gave its nod for another proposal where KKR would acquire 24.9 per cent stake in Gland Celsus Bio Chemicals. In January, fair trade watchdog Competition Commission of India approved the deals.

KKR, Gland Pharma and Gland Celsus had entered into the share purchase agreements on November 27 last year. KKR had also entered into a shareholders’ agreement with the promoters of Gland Pharma and EILSF Co-Invest I LLC, an existing private equity investor in Gland Pharma.

P V N Raju, Founder-Chairman, Gland Pharma said, “Gland Pharma is at an important juncture in its evolution where we have proven our sterile manufacturing capabilities, established ourselves as a high-quality manufacturer of complicated injectables products and achieved a track-record of strong financial performance. Our partnership with KKR will help us in our next phase of growth as we look to materially expand our manufacturing capacities and invest more in our development work with the goal of expanding our product registrations.” Raju also said, “We thank the Vetter family of Ravensburg, Germany, who are investors in Gland Pharma, for inspiring Gland Pharma in the niche field of pre-filled syringes. Vetter Pharma, owned by the Vetter family, enjoys a pre-eminent position globally in the field of pre-filled syringe technology.”

Dr Ravi Penmetsa, Vice Chairman and Managing Director, Gland Pharma mentioned, “We are very excited about the Company’s future given our strong pipeline of innovative injectable products that are awaiting FDA approval. In addition to securing growth capital, we look forward to leveraging KKR’s global network of relationships to help enter new markets.” Dr. Ravi also said, “We wish to thank Evolvence India Life Sciences Fund for its contribution in positioning the Company on an impressive growth trajectory, aided in particular by the team’s pro-active engagement with the Company in addition to the capital invested.”

Commenting on the agreement, Sanjay Nayar, Chief Executive, KKR India highlighted, “Gland Pharma has a track record of strong financial performance as well as long-standing relationships with Indian and international pharmaceutical companies and we believe there is significant potential for it to grow these partnerships even further. We are excited to invest behind a high-quality promoter family and management team led by Ravi. We look forward to working closely with them to help build out the business and create value for all stakeholders.”

KKR’s investment in Gland Pharma represents its fourth announced investment from the KKR Asian II Fund and its second overall private equity investment in India in 2013. The transaction is subject to regulatory approvals and other customary closing conditions. Gland Pharma is engaged in the business of production and marketing of specialised injectable formulations for generic versions of drugs, it also manufactures a limited quantity of APIs (Active Pharmaceutical Ingredients) for in-house consumption.

EP News BureauMumbai

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