Kohlberg Kravis Roberts has entered into a $200 million agreement to buy a minority stake in Gland Pharma, an Indian pharmaceutical company, according to a company statement.
As part of the acquisition, KKR is buying out the entire stake currently held by Evolvence India Life Sciences Fund, representing an exit for Indian healthcare-focused private equity firm InvAscent. It is unclear what size stake InvAscent holds in the business. However, its initial investment in Gland in 2007 was $30 million, according to the firm.
Gland Pharma develops and manufactures generic injectable pharmaceutical products primarily for the US market, but also for India and other semi-regulated markets. In 2003, Gland Pharma was the first company in India to get US Food and Drug Administration approval for pharmaceutical liquid injectable products, according to the statement.
“Gland Pharma has a track record of strong financial performance as well as long-standing relationships with Indian and international pharmaceutical companies and we believe there is significant potential for it to grow these partnerships even further,” KKR India head, Sanjay Nayar, said in a statement.
“We are excited to invest behind a high-quality promoter family and management team led by [Gland Pharma vice chairman and managing director] Ravi Penmetsa. We look forward to working closely with them to help build out the business and create value for all stakeholders.”
KKR is investing in the business as its fourth deal from its KKR Asia Fund II, which closed on $6 billion in July this year. Industry sources have questioned whether the firm would be able to deploy such a large fund in Asia Pacific, however, KKR has been actively investing since the close.
Other acquisitions from the fund include a $1.6 billion buyout of Panasonic Healthcare in Japan in September and a $200 million investment in Malaysia’s Weststar Aviation Services in October, Private Equity International reported earlier.
Gland Pharma is also the firm’s second investment in India this year, according to the statement.
But the prior deal, which was also in the healthcare sector, was not made out of Asia II. In October, KKR offered a $90 million convertible loan to India’s Apollo Hospitals to address the company debt and build more hospitals.
India’s healthcare sector has been particularly attractive to private equity firms.
In a recent interview with PEI, Hari Buggana, managing director of InvAscent, the investment manager for the Evolvence India Life Sciences Fund, said that India’s healthcare industry was a good fit for private equity investors with experience in the sector due to high demand and need for expertise.
“As of 2012, India’s healthcare industry alone was worth $58 billion and in the past five years (2007 to 2012) it has grown at a cumulative annual growth rate of 9 percent. And yet, in India there are less than two beds for every 1000 people, whereas in China there are almost five.”
He added, “The importance of domain expertise and industry experience may not be critical in most sectors, but in certain select sectors, like pharmaceuticals, healthcare services and medical devices, domain expertise does help because inherently these sectors are very complex.”