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TAEL Partner’s Hovid up for sale

Singapore-headquartered private equity firm TAEL Partners has put its entire 64.6% stake in Malaysia pharmaceutical company Hovid up for sale for an exit, said three sources familiar with the matter.

According to the first source, the company has been on the block since late last year, with several potential suitors being approached. But the responses so far have been slow as the asking price for the controlling stake is rich with the expectation of more than 10x EBITDA, said the sources.

The sale price is expected to be more than MYR 300m (USD 68.3m), said the sources.

Hovid’s founder David Ho Sue San and his family own the remaining shares in the company. He has no intention of exiting the business at this juncture, said the sources.

Hovid and TAEL did not reply to requests for comments.

TAEL together with Ho teamed up in October 2017 to take the listed Hovid private in an MYR 243m deal, as per its disclosure to the local stock exchange. The deal was undertaken by TAEL through a special-purpose vehicle Fajar Astoria.

Based in the Northern state of Perak, Hovid was founded more than 90 years ago by Ho’s father as a Chinese herbal company. Today its manufacturing plant in Chemor, Malaysia, produces more than 400 products and is one of the largest pharma exporters in the country with a global sales and distribution network, as per its website. The company is well known for its generic drugs such as antihistamines, antibiotics, tranquilizers, analgesics, antacids, and diuretics.

Besides its established distribution and sales network, other assets of value under Hovid include a 20-acre (8.09ha) Chemor plant, around 200km North of Kuala Lumpur which has soft gel packing, effervescent dosage, and oral solid dosage facilities, as per local press report.

It also runs another three-acre plant in nearby Ipoh, where it produces soft-gel encapsulation, oral liquid, penicillin products, and the company’s heritage Ho Yan Hor herbal tea.

Other than the manufacturing plants, Hovid has a research and development centre in Penang that is dedicated to bioequivalence studies. The domestic pharmaceutical peers include Apex Healthcare [KLSE:7090] and Pharmaniaga [KLSE:7081], according to local media reports.

Pharma-related deals in the region include Vietnam-based Binh Dinh Pharmaceutical and Medical Equipment (Bidiphar) [HOSE:DBD] which is in advanced talks with three foreign investors to offer up to 25% stake in the company via a private placement, as per a report by this news service last month.

Other recent deals include the acquisition in May last year of a 20% stake in Thai-based drugs and healthcare product maker Interpharma [BKK:IP] by Thailand energy giant PTT.

In February last year, Hyundai and Rockefeller families backed Singapore-based PE firm The Sylvan Group bought majority stakes in four Singapore healthcare and pharmaceutical companies for USD 140.5m, according to The Sylvan’s announcement.