Bain-Piramal fund invests $144m in India's Panacea

India RF will invest primarily through non-convertible debentures valued at up to INR8.6 billion. It will also subscribe to share warrants worth INR320 million, with the option to expand its equity investment to INR1.28 billion on the issuance of equity shares against the warrants. If the warrants are exercised in full, India RF will own a 10.4% stake in Panacea on a fully diluted basis.

Founded in 1984, Panacea operates four R&D centers and two manufacturing facilities. It manufactures vaccines, antigens, and pharmaceuticals for the domestic and international markets, with 466 patents granted by a range of governments including India, Russia, Europe, and the US. The company’s products cover a wide range of conditions such as oncology, organ transplantation, nephrology, diabetes, osteoporosis, and cardiovascular disease.

For the year ended March 2018, Panacea reported INR5.8 billion in revenue, up from INR5.4 billion the year before. Its net loss shrank from INR727 million to INR719 million, with the company attributing continued losses to strong competition in the global and domestic market and a complex regulatory environment that has slowed down the clinical trials process. Panacea will use the India RF investment for a one-time settlement with lenders so that it can focus on growth.

“The purpose of this investment is not only to restructure the company’s balance sheet, but more importantly, work closely with the promoters and management team to drive rapid revenue growth and sustainable profitability improvement,” said Shantanu Nalavadi, a managing director at India RF, in a statement. “India RF remains focused on providing long-term strategic solutions that enable an effective turnaround for high-quality companies that have the potential for accelerated growth and profitability.”

Bain and Piramal launched India RF in 2016, committing $100 million each against a target of $1 billion; the International Finance Corporation (IFC) also invested $100 million last year. The vehicle invests in distressed business in the form of both equity and debt financing, with all sectors other than real estate considered for investment.

Overseas investors have shown increasing interest in Indian distressed assets in recent years, thanks to government measures intended to reduce protections for borrowers that have historically made asset recovery difficult. Värde Partners, Apollo Global Management, Brookfield Asset Management, and J.C. Flowers have all partnered with local specialists to take advantage of the high levels of non-performing assets in India’s banking system, which have been estimated to be worth up to $200 billion.

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• Topics
• South Asia
• Healthcare
• PIPEs
• Restructuring
• India
• Bain Capital Asia
• Pharmaceuticals
• Distressed