Stent maker Sahajanand to sell 30% stake, eyes $300 mn valuation

Mumbai: The promoters of Sahajanand Medical Technologies, India’s largest cardiac stent maker, and two private equity firms plan to sell a 30% stake in the company for about $100-150 million (Rs 1,100 crore), according to people aware of the development.

Existing investors Samara Capital and Morgan Stanley Private Equity Asia will each offer part of their 35% and 18% holdings in the company, respectively, while promoter Dhirajlal Kotadia will sell a portion of the 47% promoter stake in the Surat-based company.

KPMG, which has been hired to run the stake sale process, has approached a handful of global and Indian private equity funds. SMT is expected to be valued at $300 million, said one person.

Established in 1998, SMT develops and manufactures cardiac products that are sold in 75 countries. Its portfolio includes coronary stents (drug-eluting and bare-metal), renal stents, angioplasty balloon catheters and other cardiac accessories.

Part of the funds raised from the stake sale will be used for clinical trials in the US and for building a Rs 250 crore manufacturing plant in Hyderabad.

The spokespersons of SMT, Samara and Morgan Stanley declined to comment on the matter.

SMT posted revenue of Rs 450 crore and Ebitda of Rs 80 crore in FY20. It expects revenue to rise to Rs 650 crore and Ebitda of Rs 110 crore in FY21, said one person.

Samara first purchased a stake in SMT in 2016, investing about Rs 170 crore at a valuation of Rs 400 crore. In 2018, SMT raised fresh capital of Rs 230 crore in a round led by Morgan Stanley Private Equity Asia and Samara at a valuation of Rs 1,200 crore, said one person.

After the fundraising in 2018, SMT expanded its presence through buyouts. SMT purchased medical devices firm Vascular Concepts in May this year after it had acquired Brazilian firm Zarek Distribuidora De Produtos Hospitalares last year.

Domestic companies hold about 60% of India’s Rs 1,500 crore cardiac stent market, while multinational players have 40%. The prominent domestic companies are SMT, Everstone Capital-owned Translumina Therapeutics and Meril Life Sciences, while Abbott, Boston Scientific and Medtronic are the major MNCs in India. The global stent market stood at $8 billion.

India capped stent prices in 2017, following which rates fell by 80-85% and MNCs decided to bring down their business in India. Cardiac stents are wire-mesh devices that are used to unblock arteries and prevent heart attacks.

The current market size of the medical devices industry in India is estimated to be $11 billion and is expected to reach $50 billion by 2025, according to a report by Invest India, the national investment promotion agency.

India imported medical devices worth $6.2 billion in 2018-19, while exports stood at $2.1 billion. The country’s export of medical devices is estimated to increase to $10 billion by 2025.