Private equity giant Advent-owned contract development and manufacturing organization (CDMO) Suven Pharma has entered into a definitive agreement to acquire 67.5% stake in Hyderabad-based Sapala Organics for Rs 229.6 crore (around $27.5 million).
According to a company statement, Suven will acquire the remaining stake in Sapala by 2026-27 via a secondary transaction.
Steadmount Capital Advisors and Banyan Advisory acted as advisers to Sapala.
Annaswamy Vaidheesh, executive chairman of Suven, said, “Nucleic acid-based therapy targets diseases at a genetic level and has the potential to cure previously incurable conditions. With this acquisition, we now have multiple differentiated technology platforms such as ADCs and Oligos. We will continue to invest both organically and inorganically.”
The 100% acquisition is expected to be in the range of 13-15x EBITDA multiple, linked to the next three years’ financial performance.
Suven is an integrated pharma and specialty chemicals CDMO firm. It has grown at a 16% CAGR over the last 10 years and has over 40% EBITDA margin.
Sapala is a Hyderabad-based CDMO focused on Oligo drugs and nucleic acid building blocks, including specialized/modified amidites and nucleosides, drug delivery compounds (including GalNAc), and pseudouridine, among others. The oligo and nucleic acid building blocks market is pegged at $750 million and expected to grow at 20% CAGR, according to the release. It was founded by Dr P Yella Reddy, who specialises in nucleic acid chemistry.
Sapala had a revenue of over Rs 67 crore and adjusted EBITDA margin of more than 45% in FY24.
The development comes on the heels of Advent announcing its plan to merge its pharmaceutical portfolio companies – Cohance Lifesciences and Suven Pharmaceuticals – to create a diversified CDMO and API leader in India.
Advent entities shall own around 66.7% of the merged entity, and the public shareholders will hold the rest.
This transaction is expected to be completed over the next 12-15 months, pending shareholder and regulatory approvals.