The deal, signifying an enterprise valuation of about $1.2 billion enterprise valuation, is likely to be announced in the next few weeks, they said.
The investment will give Quadria Capital about 10% stake in Aragen Life Sciences including two-thirds primary capital, and the rest will be secondary sale where the promoters of the company will be selling some of their shares, the people said.
Aragen Life Sciences promoters Gunupati Aparna Reddy (as a trustee of Reddy Investment Trust) and Davinder Singh Brar (former Ranbaxy CEO) own 33.7% each, while Goldman Sachs has about 31.3%. The rest is held by an employee welfare trust and others.
The primary investment will be used to expand manufacturing services, which include setting up of a biologics manufacturing facility in Bengaluru.
In January 2023, the company’s board approved capital funding through an initial public offering (IPO). However, the timeline of the IPO and quantum of fundraising is yet to be finalised by the management.Aragen Life Sciences may take 12 to 18 months for an IPO, according to people in the know. The company plans to complete capital expenditure and ramp up business before it embarks on the proposed public issue, they said.Emails sent to Aragen Life Sciences and Quadria Capital didn’t elicit a response till press time.
ET reported in September that investors including Quadria Capital and Novo Holdings, the holding company of Denmark-based pharmaceutical firm Novo Nordisk, were among those interested in a minority stake and engaged in early discussions.
Indian CRDMOs are seeing tailwinds led by supply chain derisking of global pharma companies from China, which remains the largest hub of life sciences outsourcing services. The ongoing discussions on the US Biosecurity Act are likely to provide an opportunity for Indian CRDMOs with quality and scale as US customers look for alternatives outside China.
Aragen Life Sciences reported consolidated revenue of Rs 1,675 crore for 2023-24, with earnings before interest, taxes, depreciation and amortisation of Rs 450 crore. Profit after tax was Rs 160 crore. The company gets about 65% of its revenue from drug discovery services, which include a range of services that help identify and develop potential drug candidates. It has more than 400 customers, including six of the top 10 global pharma companies.
Quadria Capital is among the prominent private equity firms investing in India’s healthcare sector. The firm had earlier said that it would invest up to $1 billion in India’s healthcare sector, focusing on single specialty chains, CDMOs and diagnostics, among others, over the next two and a half years, by mainly acquiring minority stakes ranging from 15% to 45%. Its recent investments include dialysis chain NephroPlus, eye care hospital chain Maxivision and specialty CDMO Encube Ethicals.
Quadria also recently said it plans to invest about half of its capital in Indian companies that offer healthcare solutions to address adverse situations brought out by climate change. The PE firm projects $3 billion annual market potential for private investments in adaptation-focused strategies on climate and health, according to its new report titled ‘Financing the Climate-Health Frontier: Emerging Opportunities.’
