Emerging as the front-runners to acquire a controlling stake in one of the largest card stent manufacturers in India, Sahajanand Medical Technologies (SMT) is based in Mumbai, Cipla, and Alkem Laboratories have completed all due diligence on the firm, says a report. Private equity giants KKR, TPG Capital, and Apax Partners had earlier withdrawn from the acquisition of the company, considering interest.
The deal is likely to value SMT at ₹3,500 crore and ₹4,000 crore. Binding offers are likely to be submitted next week. As per sources, the Kotadia family, promoters of SMT, would continue to hold on to a minority stake in the company post the transaction. They will likely hold on to a 15-20 percent shareholding in the business. Other shareholders too are expected to divest their stakes in this very significant deal.
Morgan Stanley Private Equity Asia, along with Samara Capital owns 49 percent of SMT, while Kotak Pre-IPO Opportunities Fund has 6 percent. The balance 45 percent is held by the Kotadia family.
With this deal likely to be sealed, SMT is said to aim for a listing on the home market if the stake sale fails to impress shareholders. An IPO may indeed help offer a better valuation for the company, insiders added.
On the IPO plans, it last touched the papers in 2022. The medical device firm had initially proposed to the Securities and Exchange Board of India (Sebi) in 2022 to raise ₹1,500 crore through its IPO but put those on the backburner later. Founded by Dhirajlal Kotadia in 1993, SMT today owns a 31 percent share of the country’s drug-eluting stent (DES) market and has been expanding its reach in Europe. For FY24, it reported a topline of ₹ 900 crore with EBITDA of around ₹ 140 crore. The story goes that the investors will accept a valuation that is 25 times the earnings of the company.
The India coronary stent market value is pegged at ₹1,300 crore and growing at a compound annual growth rate (CAGR) of 12 percent. Market leaders among the multinational players are Abbott Vascular, Boston Scientific, and Medtronic, with a market share of 60 percent. Indian manufacturers SMT, Translumina, and Meril Life Sciences, put together, hold 18-20 percent of the market share.
Of course, with Cipla and Alkem set to take the lead in the bid for SMT, this acquisition can revolutionize the competitive landscape in heartening growth in India’s cardiac stent market.
