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With discussions to sell stake in JB Chemicals and Pharmaceuticals running into a wall over valuation and pricing, private equity firm KKR is understood to be weighing the prospect of exiting through market sales, via the block deal windows of Indian exchanges, sources said.
The $2 billion deal has been in the making for several months, and only a few drug manufacturers had a look in, as the deal value was high. At one time, it looked as if Torrent Pharmaceuticals, the company with which KKR originally initiated dialogues, would walk away with the PE firm’s 54 per cent stake.
However, there were differences over valuations and the price at which KKR was willing to hand it over and what the buyer was prepared to pay and certain other niggling issues, sources said. There were reports of other companies such as Alkem Laboratories being interested, but there hasn’t been much progress, and at the moment the deal is at a standstill.
“A straightforward deal looks difficult due to the pricing,” said a senior investment banking executive, who has been involved in similar deals in the Indian pharma sector and keenly watching developments. “They may eventually have to go for a market exit.” A KKR spokesperson declined to comment on market speculation.
This will not be the first such stake monetisation for KKR, which sold its 27.54 per cent stake in Max Healthcare in 2022 through bulk deals.
Market capitalisation
JB Pharma currently has a market capitalisation of ₹26,822 crore (over $3.2 billion), and KKR’s stake, through Tau Investment Holdings, is worth ₹14,410 crore ($1.7 billion approx).
The stake sale, if through the block deal route, would be divested over several tranches and how much KKR will realise through the sale would depend on the market price at the time of sale; but the PE firm will likely try to realise something in the region of $2 billion.
JB Pharma’s shares have appreciated a tepid 17 per cent over a one-year period, but in August it hit a 52-week high of ₹2,030, recovering from a 52-week low of ₹1,244.45 it had slipped to in October last year.
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