Suven to acquire controlling stake in Sapala Organics, a CDMO player

Suven Pharmaceuticals has entered into a definitive agreement for a strategic controlling investment in Sapala Organics, subject to regulatory approvals and conditions. 

Sapala is a Hyderabad-based CDMO focused on Oligo drugs and nucleic acid building blocks including specialised/modified Amidites and Nucleosides, drug delivery compounds (including GalNAc), Pseudouridine, amongst others. The oligo & nucleic acid building blocks market is a ~$750 million market and is expected to grow at a robust ~20 per cent CAGR. Sapala’s customer base includes innovator Pharma, CDMOs, and diagnostic companies, and is a key partner in their oligo drug NCE programs.

Suven to acquire 67.5 per cent equity stake (i.e. 51 per cent of the share capital of Sapala on a fully diluted basis) for a consideration of Rs. 229.5 crore subject to customary working capital and net debt adjustments. The company will acquire the remaining equity stake a few months after FY2026-27, as per the terms of the definitive agreements. Upon consummation, the company will own 100 per cent of the share capital of Sapala on a fully diluted basis. The transaction is subject to customary closing conditions. Steadmount Capital Advisors and Banyan Advisory acted as advisors to Sapala.

Sapala had a revenue of over INR 670mn and adjusted EBITDA margins of 45 per cent+ for FY24. Suven has agreed to initially acquire a controlling stake whereas the existing shareholders of Sapala will continue to hold a significant minority stake for the next few years. Dr Reddy will continue to run the business as the CEO and also be associated with the Suven+Chance platform as a strategic advisor for the Japan market. Overall, 100 per cent acquisition is expected to be in the range of 13-15x EBITDA multiple and is linked to the next three years’ financial performance.