Glenmark in talks sell up 30% in API biz PremjiInvest

Glenmark in talks to sell up to 30% in API biz to PremjiInvest

10:52 AM, 23rd August 2019
Glenmark Pharma logo

MUMBAI, INDIA: Glenmark Pharma is engaged in discussions with private equity fund PremjiInvest to sell 25-30% stake in Glenmark Life Sciences (GLS), the newly hived off subsidiary of active pharmaceutical ingredient (API) products.

Glenmark plans to sell a minority stake for $150 million (about Rs 1,100 crore), valuing the business at $600-700 million (about Rs 5,000 crore). Glenmark was also in discussions with other global funds such as Carlyle and Goldman Sachs for the stake sale, which also did not progress further, said one of the persons cited above.

"Glenmark's discussion with True North is not taking pace and it has begun talks with other PE funds simultaneously," said one of the persons cited above. However, the valuation has gone for a toss and it is not sure whether a deal will be signed soon, he added.

Avendus Capital is advising Glenmark to find a buyer.

Glenmark Life Sciences is primarily engaged in manufacturing and marketing of API products across all major markets globally. It also includes captive sales (use of API by GPL for its own formulations). It has four dedicated API manufacturing facilities, of which three are approved by the US FDA.

As part of unlocking value, Glenmark transferred its API business to a wholly-owned subsidiary, which became operational on January 1, 2019. Over 75% of GLS revenue comes from regulated markets of Europe, the US and Japan. The top 10 molecules contribute 60% of the overall revenues of GLS.

Consolidated revenue at Glenmark Life Sciences stood at Rs 1,445 crore in 2018-19, a growth of 12% over Rs 1,289 crore in 2017-18. Spokespersons with Glenmark, PremjiInvest, Carlyle, Goldman Sachs and True North declined comment.

As part of reducing its piled-up debt, Glenmark had hived off noncore businesses into new subsidiaries with stake dilution plans.

The company plans to reduce debt by Rs 700-800 crore in FY20. As on March 31, Glenmark had a debt of Rs 3,877 crore, down from Rs 4,639 crore in FY18. Besides API business, it had spun off its innovation business into a new a wholly owned subsidiary headquartered in the US.

ET had reported last year about the discussions between private equity firm True North Capital and Glenmark Pharmaceuticals over stake sale in the API business for Rs 1,200-1,500 crore.

Source: Economic Times

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