Jul. 5, 2021
Sajjan India Ltd, one of the largest agro chemicals company, is exploring to sell a controlling stake in the family-driven entity as it looks to reap benefits of a post-pandemic capital inflow into core industrial assets across emerging markets.
The Gujarat-based firm, controlled by Madhav Prasad Aggarwal, has hired investment bank JP Morgan to run the sale process, according to multiple people aware of the development.
The company is expected to be valued at around Rs8000 crore, said one of the persons cited above. Feelers were sent to large buyout funds such as KKR, TPG, Carlyle, Temasek and Advent International.
Sajjan is a leading contract manufacturer of active ingredients (Agro), electronic chemicals, specialty chemicals and intermediates having applications across agrochemicals, pharmaceuticals and dyestuff.
When contacted, Sajjan India spokesperson declined to comment. Mails sent to KKR, TPG, Advent, Temasek and Carlyle dis not elicit any responses.
Sajjan India has an estimated revenue of Rs1400 crore and an EBITDA of Rs560 crore for FY22, said one of the sources.
Founded in 1975, Sajjan India diversified into the chemical world in 1983 with manufacturing of dyes intermediates and textile auxiliaries for the export market. In 1985, a tie-up with Hoechst AG was established for supply of Dye Intermediates. In 1997, Sajjan India Limited consolidated its operations in the current site in Ankleshwar and further diversified into manufacturing of Agrochemical Intermediates in 2001.
In 2003, Sajjan India ventured into manufacturing customer patented products under technology transfer agreements.
Agrochemicals and specialty chemicals sectors in India have seen an attention from global private equity funds and strategic investors.
Recent investments include acquisition of Baroda-based specialty aroma chemicals company Best Value Chem (BVC) by PremjiInvest, the investment arm of billionaire Azim Premji, buyout of agrochemicals company Bharat Insecticides by Tokyo based Mitsui and Nisso in 2020, ChrysCapital's minority stake buyout in Safex Chemicals India Ltd - an agrochemical company and Convergent Finance's acquisition of a minority stake in speciality chemicals maker Camlin Fine Sciences Ltd.
The mergers and acquisition activity will be an important lever for agro chemical companies recover and look for growth this year, according to Deloitte.
“Deal activity across all chemical sectors followed a similar trend of a sharp drop at the onset of the pandemic and then an uptick starting in August. Overall deal volume has continued to decrease year-over-year for the last four years, with significant declines in 2020 in commodity chemicals, specialty chemicals, and fertilize,” Deloitte said in its global M&A outlook.
“However, there appears to be a favorable environment for strong M&A activity in 2021—continued portfolio realignment by corporations, abundant dry powder from private equity funds, a favorable interest-rate environment, an improving economic backdrop, and corporations now looking for growth,” it added.
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