Healthcare-focused private equity firm Quadria Capital is investing $100 million (about Rs 860 crore) in Hyderabad-based contract drug development and manufacturing company Aragen Life Sciences Ltd.
The Singapore- and Delhi-based PE firm will pick up a minority stake in Aragen at a valuation of $1.4 billion, the pharmaceutical company said in a statement Monday.
The investment by Quadria, which aims to raise up to $1 billion for its latest fund and made the first close in October 2023, will mostly comprise a fresh infusion of capital into Aragen along with a small component of share sales by existing shareholders, the company said. It didn't disclose the exact breakup or the names of the selling shareholders.
Aragen, which is also backed by private equity funds managed by Goldman Sachs, will use the funds to expand its capabilities and infrastructure. This will enable the company to meet the growing demand for outsourcing services from innovators in the US and Europe, Aragen said in a statement.
The round would count as a pre-IPO fundraise for the contract research, development and manufacturing company as Aragen is considering an initial public offering and has initiated talks with bankers, VCCircle reported last month.
Aragen's origin goes back to 2000 when it was started by GV Sanjay Reddy, part of the family that controls GVK Group. In 2004, Davinder Singh Brar, former CEO and managing director of drugmaker Ranbaxy, joined the company as co-promoter and chairman. In 2014, the original entity bought Aragen Bioscience Inc, a US-based preclinical contract research organisation specialising in biologics services. The business was later renamed Aragen Life Sciences.
Over the years, the company raised external capital from investors. In 2007, venture capital firm Sequoia Capital invested in the company. Sequoia exited in 2015 by selling its stake to private equity firm ChrysCapital. The PE firm and a GVK group company exited in 2021 when Goldman joined the cap table. Goldman owned a 30.72% stake in Aragen, according to the company’s annual report for FY24.
The company’s consolidated revenue from operations declined to Rs 1,657.6 crore during FY24 from Rs 1,736.6 crore the year before while net profit slumped to Rs 160.1 crore from Rs 219.8 crore, as per its annual report.
Aragen provides drug discovery and development services to pharmaceutical, agrochemical and biotech companies. It also manufactures active pharmaceutical ingredients (APIs) and API intermediates. The company currently operates five facilities in India and one in the US.
Meanwhile, founded in 2012, Quadria Capital manages assets worth $3.4 billion. In May 2024, Quadria invested $102 million in the dialysis chain NephroPlus. In 2023, it made its largest India investment of $155 million in Maxivision Eye Hospital. Quadria is also planning to offload its stake in Encube Ethicals Pvt. Ltd, a contract development and manufacturing organization (CDMO) for topical drugs, via an IPO, VCCircle previously reported.
