Private equity major Baring Private Equity Partners India could invest around Rs 70 crore in Shilpa Medicare Ltd, a manufacturer and exporter of active pharmaceutical ingredients. Baring India Private Equity Fund III Limited will buy two million shares in the company for Rs 350 per share or the price as per the regulation 76 of Chapter VII of the SEBI (ICDR) Regulations, 2009, said the company in a filing.

The investment could give an 8-9% stake on a post-diluted basis to Baring, which has backed companies like Sphaera Pharma and ReaMetrix in the pharma space. The promoters of Shilpa Medicare, who currently have around 60% stake, are also buying 500,000 warrants to shore up their holding.

“We are very keen to explore a partnership opportunity with the company and would be able to comment fully once the process has been completed from all sides," said a Baring India spokesperson when contacted by VCCircle. The deal has been approved by the board of Shilpa Medicare and needs approval of shareholders.

Shilpa Medicare Ltd is a Raichur, Karnataka-based pharma company engaged in the manufacturing of API, fine chemicals, intermediates, herbal products and specialty chemical products.

The company's profit-after-tax has increased by more than 10 times during the last four years from Rs 4.27 crore in FY06 to Rs 44.3 crore in FY10. Shilpa Medicare was trading today at Rs 355.7, down by more than 2.7% at 3 pm today. The company has a market capitalisation of Rs 782.5 crore and reported revenues of Rs 264 crore in FY10.

Shilpa Medicare has a track record of giving good returns to its PE investors. Recently, Tano Capital completed its exit in the firm with a 4.5x returns. Before that Strategic Ventures Fund Ltd (SVF), a private equity fund managed by Frontline Strategy, also exited Shilpa Medicare with 4x returns.

Baring India closed its fund III at $550 million in 2008 and recently invested Rs 157 crore along with Matrix Partners in Kerala-based NBFC Muthoot Finance Ltd.

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