Apax leads race for Rs 2,600 crore sutures deal
MUMBAI: Buyout investor Apax Partners has emerged as the front runner to acquire India’s largest surgical and wound care products maker Healthium Medtech(formerly Sutures India) in a deal estimated at around $400 million, or Rs 2,600 crore, two people directly aware of the matter said. Majority owner and private equity investor TPG had mandated Goldman Sachs to find a suitor for the Bengaluru-headquartered company last year.
If it goes through, this would only be the third Indian acquisition by Apax, which had earlier acquired IT services companies like iGate and GlobalLogic. London-based Apax, managing assets worth $51 billion, was vying with another global investor, Carlyle, in the final lap of the deal-making to acquire the 25-year-old company, co-founded by L G Chandrasekhar and S Subramanian.
Healthium Medtech is a manufacturer and exporter of absorbable and non-absorbable sutures, surgical mesh, gloves and surgical tapes in a market heavily dominated by MNCs. It stakes claim as the largest Indian maker of sutures with a domestic market share of 22%, but is behind Johnson & Johnson (J&J). India’s still evolving wound care market — estimated at about $3 billion — is buoyed by rising number of surgical births, knee replacements and cosmetic procedures, among other factors.
TPG controls 73% stake, while smaller private equity investor CX Partners has 12%. The founders and management own the remaining shares. The company’s annualised revenues are estimated at about Rs 1,200 crore with an ebitda, or operating profit, of about Rs 180 crore. Global healthcare equipment giants Boston Scientific, Covidien Medtronic and J&J had shown initial interest to buy the company before losing out to private equity investors, which are in the midst of an unprecedented buyout spree when it comes to Indian businesses.
“TPG is set to make a highly profitable sale in the coming weeks. Apax and Carlyle were shortlisted though the former has emerged as a frontrunner right now,” one of the sources cited earlier said on condition of anonymity, since the deal talks are private. Six years ago, TPG initially picked up a 23% stake and ramped up as the owner as it helped the company to expand the product portfolio and even markets. Healthium, which was Sutures India then, had acquired Quality Needles for Rs 450 crore erly last year.
When contacted, TPG declined to comment on the story, while Apax Partners could not be reached for comments immediately.
The company, which employs more than 350 people, exports 40% of its production. It exports to 100 countries in Europe, South America, Asia and Africa.
Apax focuses on investments in tech, healthcare and consumer industries where it looks to strike transformational deals. Its current Indian investments include Zenzar Technologies and Shriram City Union Finance. Apax exited Cholamandalam Finance, where it held an 11% stake.
Asia has emerged as the fastest growing geography for the $18-billion advanced wound care industry. Increased research, a large population in China and India, and rising focus of the global companies have made Asian markets crucial for the sector, according to RnR Market Research report.