5 days ago
Avendus Future Leaders Fund invests ₹300 cr in Aragen Life Sciences with SBI Life
Avendus Group's private equity fund, the Avendus Future Leaders Fund (FLF) has made a ₹300 crore investment for a minority stake in Aragen Life Sciences alongside SBI Life Insurance. Both investors contributed an equal amount, i.e. ₹150 crore each. The investment was made out of FLF III.
The stake purchase is a secondary transaction, with both investors buying 'over 2.5%' in Aragen from the Reddy Investment Trust, which is associated with the GVK Group. The Trust diluted its stake in Aragen, which was earlier known as GVK Biosciences, before rebranding it in December 2020 to its current name.
'Healthcare has been a secular theme across funds for a long time. We've now done two deals in the sector," Ritesh Chandra, managing partner of the Avendus Future Leaders Fund, told Mint in an interview. The fund targets late-stage companies across all three of its investment vehicles.
Aragen Life Sciences is a contract research, development, and manufacturing organisation (CRDMO) based in Hyderabad. It provides services like drug discovery, development, and manufacturing to other companies in the healthcare and pharmaceutical industry.
Avendus FLF III is the latest investor to join Aragen's capitalisation table. Chandra said that the fund's strategy hadn't changed between its three funds. 'We're more of a passive fund that takes stakes in large businesses. We don't compete with private equity. In fact, we work with them in terms of co-opting the ecosystem. So our stakes are typically under 5%," Chandra said.
Other investors in Aragen include investment banking giant Goldman Sachs and healthcare-focused private equity firm Quadria Capital, which invested $100 million for a minority stake in the company at an approximate valuation of $1.4 billion. 'With our investment, the valuation is close to the previous round," Chandra said.
Avendus Future Leaders Funds' first investment in the healthcare industry was in La Renon Healthcare, made in February. Avendus acquired a minority stake in the company for ₹160 crore.
Closing FLF III
Avendus operates three Future Leaders Funds. FLF I was ₹350 crore, while FLF II and FLF III are both ₹1,500 crore, the latter has a greenshoe option for another ₹1,500 crore. The fund reached a first close of ₹850 crore in January and is now nearing its ₹1,500 crore target.
'Given inbound interest from our investors, we're likely to exercise the greenshoe option," said Chandra. So far, 21% of FLF III's capital has been deployed, with investments planned over the next two and a half years to reduce exposure to economic cycles.
Avendus has a significant market share across the country's technology and startup sectors. In fact, the firm's advisory business has helped many of the country's unicorns through their early and late-stage funding cycles. In 2022, the firm began advisory services for companies planning initial public offerings (IPOs).
Exit from Juspay
Avendus has partially exited Juspay Technologies, a payments orchestration and solutions provider. The fund first invested in Juspay in 2022 from FLF I and later from FLF II.
'From FLF I, we've returned 1.5X of the capital to our investors. We only sold our position in Juspay from FLF I and continue to retain our position in Juspay from FLF II," said Chandra. Avendus FLF exited its investment in Juspay earlier this year when the company raised a $60 million Series D by selling its stake to Kedaara Capital, which led the investment round.
