The Kotak Strategic Situations Fund (KSSF), an alternative assets management fund within the Kotak Group, intends to invest around ₹1,600 crore in the active pharmaceutical ingredients (API) business recently purchased by Nimmagadda Prasad from Viatris, said two people aware of the development.
KSSF plans to back this ₹3,800 crore ($450 million) acquisition through a $200 million funding, which will be a mix of structured debt and equity, as per the sources. Additionally, Deutsche Bank and DBS are reported to have provided financing for the acquisition. However, the precise details of the transaction structure remain undisclosed.
Prasad, the founder of Matrix Laboratories, had previously sold his API manufacturing business to Mylan, which was later rebranded as Viatris, back in 2007. This acquisition was facilitated through Iquest Enterprises. In March, Kotak Investment Advisors successfully raised $1.25 billion as the initial close of the Kotak Strategic Situations Fund II (KSSF II). This fund is designed to offer strategic solution capital to a wide range of growth and value-oriented companies, irrespective of their industry. It will provide various forms of capital, including equity, debt, and hybrid capital.
The first fund, Kotak Special Situation Fund I, has completely invested $1 billion across 14 companies.
Notable investments within this portfolio include ₹1,070 crores in Biocon, as well as significant stakes in AGS Transact Technologies, Sify Infinit Spaces, Gold Plus Glass Industry Ltd, logistics company TVS Supply Chain Solutions, speciality chemicals firm DCW, cement player Sanghi Industries, and Nuvoco Vistas.
Kotak Investment Advisors (KIAL), established in 2005, has successfully raised more than $8.7 billion across various asset classes. These include private equity, real estate, infrastructure, special situations, and listed strategies.
Viatris had previously made its non-core businesses in India available for sale, which included the API business and women’s healthcare business Famy Care. However, the API sale process faced challenges in attracting serious buyers due to the company’s significant exposure to the antiretroviral (ARV for HIV/AIDS) sector, which has a limited sales volume.
Viatris had initially aimed for an enterprise value of $600 million (₹5,000 crore) for the API business, which represented a multiple of six times its FY24 EBITDA number. However, it ultimately sold the business at a lower price.