Motilal Oswal Alternate Investment Advisors (MO Alts) has invested in India’s pharmaceutical sector. MO Alts has invested INR 460 crore in Megafine Pharma through its fourth investment fund. Megafine is a major API provider in the pharma sector. Following this investment, MO Alts’ stake in the company has increased to 60%. This investment will grant Motilal Oswal sole control over Megafine.
About Megafine Pharma
Megafine Pharma was established in 1995 and is a Mumbai-based company. The company mainly focuses on the production and export of raw materials used in pharmaceutical manufacturing. It provides high-quality generic raw materials for medicines used in the treatment of cardiovascular diseases, nervous system disorders, and urinary disorders. The company has a presence in more than 40 countries.
The primary customers of the company are global drug discovery and generic medicine manufacturers. Megafine has two manufacturing facilities situated in Nashik and Vapi. Both of the units are USFDA approved the company also offers contract manufacturing services.
Transaction Details and Future Plans
The acquisition was structured through a secondary share purchase that also involves buying from existing shareholders. One of the founding promoter groups ‘Sanghvi family‘ has increased its shareholding as part of the transaction.
MO Alts plans to leverage Megafine’s strong R&D and manufacturing capabilities to scale operations further. The company is now targeting a 50% increase in production capacity by the end of 2026. Additionally, the firm is also eying inorganic growth opportunities that mean acquisition of the other API manufacturers.
Industry Outlook and Strategic Rationale
India’s API industry is experiencing double-digit growth, driven by a global shift in supply chains away from China. MO Alts sees long-term potential in the API sector, allocating 25-30% of its investment fund to pharmaceutical and healthcare businesses.
“With a focus on expanding our healthcare investments, Megafine’s niche positioning and strong manufacturing capabilities align perfectly with our vision,” said a representative from MO Alts.
Advisors Involved
The deal was facilitated by several financial and legal advisors:
- Megafine Pharma’s advisors: Deloitte (financial), JSA & Pioneer (legal)
- MO Alts’ advisors: Quillon Partners (legal), Alvarez & Marsal (financial), PWC (tax), MP Advisors (commercial)
Conclusion
Motilal Oswal is betting on Magafine’s API manufacturing business. The government’s initiative of Make in India will also play a crucial role. Recent industry trends suggest that after the potential investment and acquisition, the company’s target for an IPO.
In the past five years, as many as 17 IPOs listed in the primary market out of these 17 IPOs only 2 IPOs delivered negative returns. These IPOs collectively raised INR 27,661.15 crore. The average listing returns stands at 39.05%.
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