A consortium formed by Warburg Pincus and Mubadala is close to finalizing an agreement to buy a majority stake in Encube Ethicals in a deal that could value the Mumbai-based pharmaceuticals contract manufacturer at close to 24 times its projected FY26 EBITDA. The value is indicative of the injection of funds into scaled CDMO businesses. EQT, the other runner in the bid race, is a Swedish firm.
A prominent private equity transaction is on the cards in India’s pharmaceutical manufacturing industry. The Warburg Pincus-Mubadala consortium has emerged as a front-runner to win a majority stake, or as much as 74%, in a noted contract development and manufacturing organization (CDMO) named Encube Ethicals. The proposed transaction, for binding offers next week, values the drugmaker at about Rs 16,500 crore, or $1.8 billion.
Valuation reflects sector strength:
The valuation, pegged at nearly 24 times projected FY26 EBITDA, underlines the strong appetite for well-established, scaled CDMO players in India. This interest is triggered by global supply chain realignments moving away from China, the strategic implications of the U.S. BioSecure Act, and India’s inherent cost advantages. The sector also drew in vigour due to increasing demand for complex biologics.
Deal Structure and Future Outlook:
The current promoters of Encube Ethicals, including founder Mehul Shah and his family, hold around 84.2% and are likely to see a significant dilution. Financial investor Quadria Capital holds 14.9% and is likely to exit fully. The promoter group will retain only 15-20% stake and will transition into a junior partner. Management is expected to remain steady in the near term, with founder Mehul Shah as co-promoter until IPO, which could be around four years hence.
Encube Ethicals’ Business:
Encube Ethicals was established in 1998 and focuses on topical formulation technology, developing a variety of products for dermatology and reproductive healthcare. The product portfolio includes such well-known brands as Soframycin skin ointment.
