To Acquire Glenmark’s API business: Sekhmet Pharmaventures, Nirma in Race

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Sekhmet Pharmaventures has joined the race to acquire BSE-listed Glenmark Life Sciences (GLS) as promoter Glenn Saldanha looks to reduce the company’s debt burden, The Economic Times (ET) reported Monday. Ahmedabad-based Nirma Group is already in the fray. Glenmark Pharmaceuticals Ltd owns an 82.8 percent stake in GLS.

Backed by private equity firms PAG, CX Partners and Samara Capital, Sekhmet is an active pharmaceutical ingredient (API) company. ChrysCapital, another India-focused private equity firm, is also eyeing the opportunity to collaborate with Singapore-based GIC Limited Partners and Canada’s CDPQ, the report said. However, the company may withdraw from the process before binding bids are submitted by the end of June.

In the fiscal year 2021-2022 (FY22), India imported APIs and bulk medicines worth Rs 35,000 crore (about $4.5 billion). This is 35 percent of the total Indian API requirements. Of this, China provided 65-70 percent.

The government is offering incentives to local API manufacturers, as part of its “Made in India” initiative to reduce the country’s dependence on China.

In the past three months, the share price of GLS has increased by 52 per cent from Rs 386 in anticipation of a transaction. On Friday, the company’s share price hit a 52-week high of Rs 595.

The report said that GLS hopes to secure a large controlling premium of 700-720 rupees per share. This amounts to a 22 percent premium despite the stock’s appreciation. The report quoted sources as saying that this increase in the share price is a potential obstacle to the deal.

Kotak Mahindra Capital advises on the transaction. The due diligence process is currently ongoing with the transaction.

The report said Saldana wants to keep a small stake and is in talks with bidders, most of whom are unlikely to join. Glenmark attempted to enter into a minority deal with True North in 2018. However, the deal did not materialize. Subsequently, the API business was spun off and listed as a separate entity. Glenmark’s API business generated revenue of Rs.878 crore in FY18 and has risen to Rs.2,161 crore currently.

Sekhmet has bought several pharmaceutical companies in the past few years. In 2021, it acquired Hyderabad-based Optimus Drugs, a manufacturer of advanced media, APIs and off-the-shelf medicines for Rs 2,000 crore. In 2020, it acquired control of Chennai-based API manufacturer Anjan Drugs.