CVC Capital is reportedly in discussions with lenders to restructure a $350 million loan taken for the leveraged buyout of Sajjan India in 2021. The company, now rebranded as Cohizon Life Sciences Ltd, has been facing severe headwinds, leading to a significant drop in its revenue and profitability, according to a report by Moneycontrol.
Key Highlights:
- Stake Acquisition: CVC Capital acquired an 89% stake in Sajjan India at a valuation of Rs 7,000 crore in its largest deal in the Indian market.
- Financial Struggles:
- FY24 revenue declined by 30% to Rs 1,052 crore compared to the previous year.
- FY24 net profit dropped 61% to Rs 106 crore.
- Valuation Decline: In FY25, the company repurchased a 10% stake from a former promoter for Rs 219 crore, valuing the company at Rs 2,190 crore—a sharp fall from the initial Rs 7,000 crore valuation.
- Loan Restructuring Reasons: Falling cash flows and declining EBITDA margins have pressured the company’s ability to repay or refinance its debt.
Sajjan India’s Business Overview:
- Rebranded as: Cohizon Life Sciences Ltd.
- Core Products: Active ingredients, electronic chemicals, specialty chemicals, and intermediates for agrochemicals, pharmaceuticals, and dyes.
- Revenue Dependency:
- 90% revenue from agrochemical sector.
- High customer concentration: Top 10 customers contributed 79% of FY24 revenue.
- Sector Challenges: Global agrochemical sector struggles with increased channel inventory and pricing pressure due to aggressive Chinese dumping.
CVC’s India Investments:
- Sajjan India: Acquired in 2021; now facing valuation and profitability challenges.
- Gujarat Titans: Purchased the IPL team for Rs 5,625 crore in 2021; CVC is reportedly in talks to sell the franchise.
- HealthCare Global Enterprises: Holds a 60% stake since 2020 and is exploring a sale.
- Aavas Financiers: Won a bid in August 2024 for Kedaara Capital and Partners Group’s stake, valuing the lender at Rs 13,000 crore.
The restructuring of Sajjan India’s leveraged buyout loan underscores the challenges faced by private equity firms in managing LBOs amid adverse business conditions.
Disclaimer: This story is based on information reported by Moneycontrol and is for informational purposes only. The content should not be considered financial or investment advice.
