The funding round will see existing investors Multiples Alternate Asset Management Pvt. Ltd. (Multiples PE) exit the company that is now valued at around $800 million.
The deal involves $15-25 million of primary capital that the company will use to launch a new line of products. The promoters have also sold some shares in the company to take some money off the table.
The PE fund had invested about Rs 275 crore, or $40 million, in Encube in 2016 for a 10% stake in the company. With this deal, Quadria will be a significant minority partner with almost 25% stake in the company along with its co-investors.
was the first to report on Multiples PE’s plan to exit on Jan. 5 this year. Investment bank Kotak Mahindra Capital Co was the adviser to the deal.
Founded by Mehul Shah in 1998, Encube Ethicals does contract development and manufacturing (CDMO) of topical semi-solid dosage formulations including ointments, creams, solutions and lotions for global players. It also has its own line of products.
“The company is looking at developing more of their proprietary products in the hormonal and face creams segment,” Amit Varma, co-founder and managing partner at Quadria Capital, said in an exclusive interaction with ET. “The idea is to launch these products in India as well as the South East Asian markets.”
The company serves pharmaceuticals and cosmetic companies globally. Its major clients include Dr Reddy’s Pharmaceuticals, Alembic Pharma, GlaxoSmithKline, Glenmark Pharma, Alkem Laboratories, Johnson & Johnson, L’Oréal, Reckitt Benckiser, Sanofi, Sun Pharma and Torrent Pharma.
“We aspire to grow organically and inorganically and will be making long-term investments across the value chain. I am certain that matching our capabilities to our topical-focussed strategy will best position Encube to continue to create and deliver value,” said Encube’s founder and managing director Mehul Shah.
For Multiples PE, this would be its third exit since the beginning of the year. It had earlier made a windfall from its stake sale in Delhivery and Vikram Hospitals. The fund also sold a part of its stake in RBL bank for a loss.
“We are very proud that we played a pivotal role in transforming Encube from a contract manufacturing company to a fully integrated pharma company with a front end in the US,” Multiples PE’s founder and CEO Renuka Ramnath said.
With more than 500 active players serving both global and domestic markets, the CDMO segment in India remains highly fragmented. According to a recent report by PwC, the global CDMO market is expected to touch $158 billion by 2025, increasing from $99 billion in 2018.
Private equity and venture capital investments in healthcare and life sciences space stood at $2.5 billion in 2020, registering a 26.94% increase over the previous year, according to data compiled by industry tracker Venture Intelligence.