KKR plans to sell 7% in JB Chemicals with an option to offload more
Source: Live Mint
Global private equity major KKR is set to trim its holdings in JB Chemicals & Pharmaceuticals Ltd, offloading a 6.8% stake worth $200 million on 27 March, with an option to pare an additional 3.5% stake valued at around $100 million, according to a term sheet reviewed by Mint.
The transaction will be routed through promoter entity Tau Investment Holdings Pte. Ltd., an affiliate of funds managed by KKR, showed the term sheet.
IIFL Capital Services, Jefferies India, Kotak Securities, and Spark Institutional Equities (a subsidiary of Avendus Capital) are the joint bookrunners, brokers, and advisors for the deal.
The floor price has been set at ₹1,625 per share, reflecting a discount of over 4% to Wednesday’s closing price, the document showed. The stock ended the session 2% lower at ₹1,695 on Wednesday.
“Strategic sell-out by the current PE promoter at high valuation also would be a key upside risk,” Elara Capital had noted in its results update on 5 February.
Performance and valuation concerns
The promoter entity owns a 53.66% stake in the drug manufacturer.
The US private equity giant had invested ₹3,100 crore to acquire a stake in the Mumbai-based drug manufacturer in 2020.
Kotak Institutional Equities had flagged ‘any senior management exits’ as key risks to the brokerage’s ‘buy’ rating.
The stock has fallen 10% year-to-date. The drugmaker’s profit after tax rose 21% to ₹162 crore in the December quarter of FY25, driven by sales growth across domestic and international markets. Meanwhile, revenue surged to ₹963 crore in the third quarter compared with ₹845 crore a year earlier.
During the earnings call with analysts on 5 February, CEO Nikhil Chopra stated that the company’s India business continues to outperform the market, driven by strong growth in the chronic segment and an expanding portfolio in the acute segment.
He said the “advancement of various new projects in our CDMO (contract drug and manufacturing organisation) business will flow through into growth numbers in near to medium term”, and he added that the company has a strong pipeline of upcoming product launches in international markets, which will drive long-term value growth.
Valuations remain a key concern for investors. Bloomberg data shows that the current price-to-earnings ratio for FY25 stands at 42.5 compared with the five-year average multiple of 36.35 times.
