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PE fund Advent International buys controlling stake in API manufacturer RA Chem Pharma

MUMBAI: Private equity fund Advent International has agreed to buy a controlling stake in Hyderabad-based API manufacturer Ra Chem Pharma from its parent Bangalore-based Micro Labs in a deal valuing the company for about Rs 1300 crore, said multiple people aware of the development.The US private equity fund is understood to have pipped a rival offer from a consortium consisting another PE fund Carlyle Group and former Mylan Labs CEO Hari Babu. Bangalore-based Microlabs controls the entity currently. An official announcement is expected soon.Investment bank Nomura has advised Micro Labs.Under the agreement, Advent will currently acquire about 74% stake in RA Chem and the remaining 26% will be bought at a later stage.Advent International has joined the race to acquire a 100 percent stake in Hyderabad-based API manufacturer Ra Chem Pharma, ET first reported On 9 July.In 2017, Micro Labs had acquired about 74 percent stake in the firm for Rs 332 crore, and its stake increased to 84 percent in 2019. Remaining stake is held by founders including Rajender Rao.Founded in 2003, RA Chem Pharma owns US FDA approved units in Jaggayyapeta (Andhra Pradesh), Nacharam, and Balanagar (Telangana). It manufactures APIs and formulations and undertakes clinical research.Advent already has a presence in pharmaceuticals space in India through buying out Bharat Serums & Vaccines last year.Advent International has been investing in India since 2007 and the firm has deployed more than $1 billion in nine Indian companies over the past 13 years. Investments include Aditya Birla Capital, Manjushree Technopack, Dixcy Textiles, ASK Group, QuEST, DFM Foods Ltd and Crompton Greaves Consumer Electricals.In 2020, India has witnessed large PE buyouts in the pharmaceuticals & healthcare sector worth $1.5 billion.In June, Carlyle agreed to buy 20 percent stake in Piramal group’s pharmaceutical business for about Rs 3700 crore and Carlyle also picked a 74% stake in animal health focused pharmaceutical company SeQuent Scientific for about Rs 1,580 crore in May.US private equity giant KKR had agreed to acquire about 54 per cent stake in Mumbai-based drug manufacturer JB Chemicals & Pharmaceuticals, for Rs 3,100 crore in the first week of July.