Quadria Capital weighs Encube sale, keeps public float option alive, too

New Delhi: Singapore-headquartered healthcare investor Quadria Capital is pursuing a dual-track process for its stake sale in Indian dermatology firm Encube Ethicals, with one strategy involving the sale of a controlling stake in the company and the other one involving a possible initial public offering (IPO) of its shares, according to people familiar with the matter.

It is seeking a $2.2 billion valuation for Mumbai-based Encube, which specialises in manufacturing topical formulations.

Buyout firms KKR, Blackstone and EQT have evinced interest in acquiring a controlling stake in the company, as per the people.

Parallelly, discussions have been held with merchant bankers for the company's IPO, they said.

JP Morgan was mandated last month for the sale process. Merchant bankers are yet to be appointed. Quadria Capital and Gulf Islamic Investments had purchased a minority stake in Encube Ethicals in 2021 at a $800 million valuation. Queries sent to Quadria Capital, KKR and Blackstone did not elicit a response till press time. Encube and JP Morgan did not respond to queries either. EQT declined to comment.


Two-Pronged Approach
Private equity firm Advent International had similarly adopted a two-pronged approach for selling its stake in Manjushree Technopack. It pursued an IPO for the company and also a strategic sale, eventually choosing the latter option. Manjushree Technopack was acquired by private equity firm PAG last year.

Promoters led by Mehul Shah own around 60% stake in Encube Ethicals. The remaining 40% shares are with investors such as Quadria Capital and Gulf Islamic Investment.

Founded in 1998, Encube Ethicals develops and markets creams, gels and ointments across dermatology and reproductive health segments in India and the US, and also operates contract development and manufacturing services from three plants in India.

The company is a contract manufacturer for global pharmaceutical companies such as GSK, Viatris, Teva, Sanofi and Reckitt as per its website.

Its turnover on a standalone basis in 2023-24 was about ₹1,000 crore. Quadria Capital recently closed its third fund of $1.07 billion. It will deploy 60% of the corpus into investments in India.

Its other investments in the country are in contract manufacturing firm Aragen Life Sciences, dialysis chain NephroPlus and eye care chain Maxivision.