IPO: Goldman-backed Aragen eyes $150 million as pre-IPO dose; Novo Nordisk keen

Mumbai: The promoters and investors in Aragen Life Sciences (formerly GVK Bio), the Goldman Sachs-backed contract research organisation (CRO), plan to dilute about 10% stake at a valuation of ₹10,000-12,000 crore (up to $1.5 billion) in a pre-IPO round, said people aware of the development.

Investors including Quadria Capital and Denmark-based pharmaceutical major Novo Nordisk are among those interested in a minority stake and engaged in early discussions, they said. In February, Novo Holdings, the holding company of Novo Nordisk, acquired US-based publicly-listed contract development and manufacturing organisation Catalent for $16.5 billion.

Aragen promoters Gunupati Aparna Reddy and Davinder Singh Brar, former Ranbaxy CEO, own 33.7% each while Goldman Sachs has about 31.3%. The rest is held by an employee welfare trust and others. The majority of the funds will be raised through a primary share issue, said the people cited.

The company provides drug discovery and development services to pharmaceutical, agrochemical and biotech firms. Its end-to-end and integrated services run across the value chain, from drug discovery to commercial manufacturing.

Challenging Year for CRO Sector
Aragen also manufactures active pharmaceutical ingredients (APIs) and API intermediates.

It has over 450 clients, including seven of the top 10 global pharmaceutical companies. With more than 4,000 employees, the firm has facilities in Hyderabad, Bengaluru, Pune and Visakhapatnam besides Morgan Hill, California.

Started in 2000 by Sanjay Reddy, DS Brar came onboard in 2004 as promoter and chairman. In 2014, it acquired Aragen Bioscience Inc, a US-based preclinical CRO specialising in biologics services, enabling customers to access an integrated R&D services platform across both large and small molecules. The business was renamed Aragen Life Sciences in 2021 following the acquisition.

In January 2023, the board approved raising capital through an initial public offering (IPO). However, the timeline of the IPO and the quantum of funds to be raised are yet to be finalised by the management.

Aragen posted total income of ₹1,675 crore in FY24, with Ebitda at ₹450 crore. Profit after tax (PAT) was ₹160 crore. FY25 revenue is estimated at ₹1,800 crore and PAT at ₹220 crore, said people with knowledge of the matter. “Depreciation and interest expenses have increased, given large capex and limited cash flow generation,” said one of them. The company has debt of about ₹675 crore, which it’s seeking to pare through the equity sales, he added.

Goldman Sachs and Novo Nordisk declined to comment. Aragen and Quadria Capital didn’t respond to queries.