Private equity firm Carlyle has agreed to acquire up to 74% of animal healthcare company SeQuent Scientific Ltd for Rs 1,580 crore (about $210 million) in what would be its biggest control-oriented deal in India.
The US-based buyout giant plans to acquire a 44.92% stake in SeQuent from its current controlling shareholders and a 5.69% stake from PE firm Ascent Capital, the Indian company said in stock-exchange filings.
Carlyle will also make a compulsory open offer to acquire up to 26% more from SeQuent’s public shareholders.
The PE firm is buying the stake at Rs 86 per share. That’s a 7% premium to the Indian company’s closing share price of Rs 80.25 apiece on the BSE on Friday.
This is Carlyle’s other major healthcare bet on an India company, after investing in diagnostics chain Metropolis Healthcare Ltd and hospital company Medanta.
This is also one of the few buyout deals that Carlyle has struck in India even though it has had a buyout team in India for a decade and a half. And even those control deals have been far smaller than what a PE firm that manages $224 billion in assets worldwide would have liked. (For more on Carlyle’s India strategy, click here.)
Carlyle is one of the earliest Western PE firms to begin operating in India, having started in June 2000. Only a handful of other US-based PE firms such as Warburg Pincus had entered India by that time. Several of Carlyle’s foreign peers such as Blackstone, KKR and Apax Partners as well as Indian firms like True North and Everstone Capital have evolved in recent years to seal mostly control deals as they seek greater operational control over the portfolio companies.
Neeraj Bharadwaj, managing director of the Carlyle Asia Partners team, said, the private equity firm will draw on its global network, industry knowledge and operating expertise in healthcare to advise SeQuent on its business expansion strategy, enhance its operations, and help the company drive sales and product innovation.
The SeQuent deal
The multi-stage transaction involves Carlyle buying out almost all of SeQuent’s 18 promoters and promoter group entities, including founder Arun Kumar.
SeQuent said 17 promoters had agreed to sell their entire stake, totalling 44.92%. Carlyle may later also buy the 11.23% stake held by KR Ravishankar. However, Arun Kumar and a couple of others may eventually retain a total of up to 9.86% stake depending upon the success of the open offer and other factors.
Carlyle would spend up to Rs 555.36 crore if the open offer is fully subscribed while it will pay Rs 121.6 crore to purchase the shares held by Ascent Capital.
The transaction is subject to regulatory approvals and is likely to be completed by October.
SeQuent functions in the animal health segment through subsidiary Alivira Animal Health. It also provides analytical services. The company reported consolidated net profit of Rs 56.87 crore on net sales of Rs 1,039.30 crore for the financial year ended March 2019, according to VCCEdge, the data research platform of Mosaic Digital.
SeQuent and its two co-founders are also promoters of two other listed companies – Strides Pharma Science Ltd and Solara Active Pharma Sciences Ltd.