Sekhmet Pharmaventures, Nirma in race to acquire Glenmark's API business

Sekhmet Pharmaventures has joined the race to acquire BSE-listed Glenmark Life Sciences (GLS) as promoter Glenn Saldanha is looking to reduce the company's debt load, The Economic Times (ET) reported on Monday. Ahmedabad-based Nirma Group is already in the fray. Glenmark Pharmaceuticals Ltd owns an 82.8 per cent stake in GLS.

Backed by private equity firms PAG, CX Partners, and Samara Capital, Sekhmet is a firm which specialises in active pharma ingredients (API). ChrysCapital, another India-focused private equity firm is also eyeing the chance to team up with limited partners GIC of Singapore and Canada’s CDPQ, the report said.

In the financial year 2021-2022 (FY22), India imported APIs and bulk drugs worth Rs 35,000 crore (approximately $4.5 billion). This accounted for 35 per cent of India's total API requirement. Of this, China supplied 65-70 per cent.

The government is offering incentives to domestic manufacturers of APIs, as part of its "Make in India" initiative to reduce the country's reliance on China.

In the last three months, GLS’s share price has risen by 52 per cent from Rs 386 in anticipation of a transaction. On Friday, the firm’s share price hit a 52-week high of Rs 595.

GLS hopes to get a significant control premium of RS 700-720 per share, the report said. That amounts to a 22 per cent premium despite the stock appreciation. This surge in the stock price is a potential obstacle to the deal, the report quoted sources as saying.

Kotak Mahindra Capital is advising on the transaction. The due diligence process is currently ongoing in the deal.

Saldanha wants to retain a small stake and is holding talks with bidders, most of whom are unlikely to accede, the report said. Glenmark had tried to go for a minority transaction with True North in 2018. However, the deal did not materialise. After that, the API business was spun out and listed as a separate entity. Glenmark’s API business has generated a revenue of Rs 878 crore in FY18 and has risen to Rs 2,161 crore currently.

Sekhmet has bought several pharmaceutical firms in the past few years. In 2021, it acquired Hyderabad-based Optimus Drugs, a manufacturer of advanced intermediates, APIs, and finished drugs for Rs 2,000 crore. In 2020, it acquired control of Chennai-based API manufacturer Anjan Drugs.