some great Private capital Funds considering the deal have been discouraged by the high valuation, they said, adding that the first round of offers is expected within weeks. Kotak Mahindra Bank is executing the sell mandate.
kkr investment arm, TAU Investment, owns 53.78% of JB Chemicals, worth Rs 14.02 billion based on a market capitalization of Rs 26.07 billion as of close of business on Thursday. KKR acquired the stake for approximately Rs 3.1 billion, or Rs 745 per share, from the founding Mody family in July 2020.
JB closed at Rs 1,683 apiece on the BSE on Thursday, down 1.1%. The stake sale will result in an open offer for up to 26% of the shares held by the public. KKR declined to comment.
The JB Pharma spokesperson said we do not comment on "market rumors and speculation."
Dr Reddy's, Mankind and Torrent Pharma did not respond to queries. Under KKR's ownership, JB Chemicals' revenue doubled to Rs 3,484 crore in FY24, from Rs 1,606 crore in FY20. KKR hired Cipla veteran Nikhil Chopra in October 2020 as CEO of JB. He set up the Mumbai-based company pharmacist in an accelerated growth path, with a new market entry strategy that involves the diversification of therapies, increased productivity of medical representatives, cost optimization, even greater growth of large brands, chronic therapies and acquisition of brands and portfolios. JB has made four acquisitions, investing $200 million, in the last four years: Sanzyme to enter the probiotics segment, heart failure drug Azmarda from Novartis, four pediatric brands from Dr Reddy's and a cholesterol-lowering portfolio from Glenmark. The company signed an agreement in December last year with the Swiss multinational giant Novartis to acquire a portfolio of 15 ophthalmic medicines for Rs 964 million. The acquisition takes effect from January 2027.
Although the Indian pharmaceutical sector remains an attractive investment destination for global private equity funds, they are not putting pressure on JB Chemicals citing high valuations. According to them, a valuation of 25-30 times Ebitda for a pure generic drug manufacturer is not justified. โFrom a private equity perspective, an overvalued acquisition cost for a period of five to seven years is not viable. However, the strategies can significantly reduce overhead by removing senior management from the acquired asset,โ said one of the PE fund managers who decided to back out of a potential deal.
VOCAL LOCATIONS
Indian pharmaceutical companies are aggressively looking to acquire domestic manufacturers to strengthen their local presence. โInorganic is the way to overcome the growth challenges faced by companies in the domestic pharma industry,โ said Charu Sehgal, former life sciences partner at consulting firm Deloitte in India.
Apart from bidding for JB Chemicals, Mankind is also one of the contenders for private equity Advent's Mumbai-based biopharmaceutical firm Bharat Serums and Vaccines, with a valuation of around $2 billion. He previously joined private equity fund ChrysCapital to bid for medical device company Healthium Medtech.
