Former GlaxoSmithKline Consumer India chairman Zubair Ahmed is advising US private equity giant KKR as it joins a list of suitors preparing to bid for the company’s health nutrition products portfolio, including Horlicks, estimated to be worth $4.5 billion.
Ahmed has been advising KKR as an “external consumer industry” consultant since last month. He is expected to play a key role in an extremely competitive bidding process that kicks off next month and has already drawn interest from Nestlé, Unilever, Coca-Cola, Kellogg Company and Reckitt Benckiser.
Both KKR and Ahmed, who has also been Asia Pacific and Middle East head of the UK healthcare giant, were unavailable for comment. “Ahmed’s involvement could be one of the most strategic moves in the bidding process,” said an official directly aware of developments. “Having Ahmed, an old timer, on your side may also help a private equity fund convince the global board to sell the business to a financial sponsor over another consumer company,” added another official on condition of anonymity.
Unlike global private equity peers such as Advent International, KKR selects only a handful of industry experts or veterans when creating industry platforms or roping them in for strategic opportunities. While acquiring a stake in Hyderabad-based Gland Pharma in 2013, former Ranbaxy CEO DS Brar was an advisor to KKR. Similarly, former Gujarat Ambuja managing director Anil Singhvi advised the US buyout fund when it bid for Jaypee’s cement asset.
KKR runs two platforms in healthcare and media – Radiant Lifecare and Emerald Media – backing professionals-turned-entrepreneurs such as Abhay Soi and Rajesh Kamath. Even though GSK Consumer’s sale process has mostly seen interest from deep-pocket global and some Indian companies, bulge-bracket PE funds such as KKR and Blackstone are also exploring the opportunity. With KKR, Ahmed will also look at other consumer-centric investment opportunities, said people in the know. “Ahmed has deep knowledge of brands, marketing and distribution, which can be leveraged upon for various things, including consumer-facing financial services. Often, it’s too expensive to buy into these companies, so it makes sense to build from ground up,” said an official.
Ahmed, a St Stephen’s College history alumnus, joined GSK Consumer India as managing director in 2007, helping the company’s revenue to more than triple over the next seven years. Before joining GSK Consumer, he headed Gillette India and was previously with Unilever.
GSK Consumer’s turnover tripled to Rs 4,868.57 crore in March 2014 from Rs 1,429.92 crore in December 2007. Analysts said this was on account of reduced dependence on the classic white-coloured Horlicks and the introduction of high-margin variants such as Horlicks for women, for mothers and no-sugar packs.
Ahmed also steered the domestic launch of Sensodyne toothpaste, marking the company’s entry into oral care in direct competition with Procter & Gamble’s Oral B and Colgate from Colgate-Palmolive, besides prioritising focus in India on other under-leveraged brands such as Crocin, Otrivin and Voltaren. In March 2015, Ahmed took over as head of Asia-Pacific, Middle East and Africa for a joint venture between GSK Consumer and pharmaceutical firm Novartis’ over-the-counter business, overseeing operations in 100 countries in these regions.
According to a GSK statement, its nutrition products portfolio including Horlicks had total sales of $550 million in 2017.
The British drug maker earlier this year initiated a “strategic review” of Horlicks and other nutrition products to support funding of its $13 billion buyout of Novartis’ stake in the global consumer healthcare joint venture formed in 2015.
Besides the Horlicks brand, GSK is exploring sale of its 72.5% stake in Indian subsidiary GSK Consumer Healthcare.