Biocon Ltd is looking to offload up to 15 per cent in its research arm Syngene International, a firm in which mid-market private equity firm India Value Fund Advisors (IVFA) recently picked a stake, it said on Friday.
The company's board approved the plan to initiate the process to list Syngene International and the firm said it would offload 10-15 per cent of its stake through an offer for sale.
Based on what IVFA valued the firm as recently as September, Biocon could be looking to encash at least as much as Rs 570 crore ($93 million).
When contacted by VCCircle, Kiran Mazumdar Shaw, CMD of Biocon, said she expects the listing to happen by the first half of FY16 which means by September 2015.
Talking about valuations, she said, “Obviously with the listing you expect to see a much higher price and valuation level (compared to what IVFA valued). We will only have more clarity on that once we approach the IPO.”
IVFA picked 10 per cent stake in Syngene for Rs 380 crore. It bought the stake from Biocon Research Limited (BRL), a wholly owned subsidiary of Biocon, through purchase of existing shares held by BRL. Post the completion of this transaction, Biocon and BRL jointly hold 85.54 per cent stake in Syngene.
The deal valued Syngene at Rs 3,800 crore ($622 million). This is much higher than the valuation at which Biocon bought back previous investor GE Capital's stake in Syngene.
In 2012, the private equity arm of GE Capital acquired 7.69 per cent stake in the company for Rs 125 crore, thereby valuing the unit at about Rs 1,625 crore. Right ahead of the deal with IVFA, Biocon bought back this stake for Rs 215.4 crore, which valued Syngene at Rs 2,800 crore.
IVFA had previously invested in Biocon in May 2003 and later exited in 2004 soon after the company went public and got listed.
Syngene offers integrated drug discovery and development services with capabilities in medicinal chemistry, biology, in vivo pharmacology and toxicology. It has a team of over 2,300 scientists and 1 million sq ft of built-up laboratories equipped with infrastructure to support the R&D programmes of global pharma, biotech and nutrition companies.
(Edited by Joby Puthuparampil Johnson)