Biocon to sell 10% stake in IVFA-backed R&D arm Syngene through offer-for-sale

Biocon to sell 10% stake in IVFA-backed R&D arm Syngene through offer-for-sale

By Anuradha Verma

  • 23 Apr 2015
Biocon to sell 10% stake in IVFA-backed R&D arm Syngene through offer-for-sale

Biopharmaceutical major Biocon Ltd's research and development arm Syngene International Ltd has filed draft red herring prospectus (DRHP) with securities market regulator SEBI to float its initial public offer (IPO).

The proposed public issue will see Biocon selling 22 million equity shares in a fully offer-for-sale issue comprising 10 per cent of the company. One-tenth of the issue is reserved for existing shareholders of Biocon.

Biocon had announced in January this year that it would list Syngene  by selling up to 15 per cent of the unit through an initial public offer.


In September 2014, mid-market private equity firm India Value Fund Advisors (IVFA) picked 10 per cent stake in Syngene for Rs 380 crore, valuing the group at Rs 3,800 crore, or just over $600 million.

Here's a snapshot of the IPO

* IPO comprises sale of 22 million equity shares held by Biocon through an offer-for-sale.


Bankers: Axis Capital, Credit Suisse Securities and Jefferies India.

Use of proceeds

* Since the entire issue comprises an offer-for-sale, the company would not receive any money and the entire money will go to its parent Biocon.



* Incorporated in 1993, Syngene is a contract research organisation (CRO), offering a suite of integrated, end-to-end discovery and development services for novel molecular entities (NMEs) across industrial sectors, including pharmaceutical, biotechnology, agrochemicals, consumer health, animal health, cosmetic and nutrition companies.

* The company's service offerings also support the development of bio-similar and generic molecules.


* During the nine months period ended December 31, 2014, the company serviced 195 clients, ranging from multinational corporations to startups, including seven of the top 10 global pharmaceutical companies by sales.

* The clients included BMS, Baxter, and Merck & Co, as well as emerging small- to mid-sized companies such as Achillion Pharmaceuticals, Inc, Aquinox Pharmaceuticals, Inc. and Saniona AB.

* The company's laboratory and manufacturing facilities are spread over more than 900,000 sq ft and located in Bangalore.


* In September 2014, its new 75,000 sq ft stability centre became operational. Also, its 200,000 sq ft R&D centre is scheduled to become operational in fiscal 2016.

* As of February 28, 2015, it had 2,096 scientists, including 259 PhDs and 1,661 scientists with a master’s degree.


* In the financial year ended on March 31, 2014, it clocked total income from operations of Rs 707 crore against Rs 505 crore in the previous financial year. In the same period, its net profit rose from Rs 102 crore to Rs 134 crore.

* For the nine months ended December 31, 2014, the company posted revenue of Rs 617 crore with a net profit of Rs 119 crore and EBITDA of Rs 207 crore.

* For the three financial years to March 31, 2014, its revenue, net profit and EBITDA grew at a CAGR of 29.9 per cent, 70.5 per cent and 30.6 per cent, respectively.


* 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. Biocon bought back this stake for Rs 215.4 crore, which valued Syngene at Rs 2,800 crore.

* Right after this transaction, last September, IVFA picked 10 per cent stake in Syngene for Rs 380 crore. It bought the stake from Biocon Research Ltd, a wholly owned subsidiary of Biocon, through purchase of existing shares held by BRL. Post the completion of the 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.

* IVFA had previously invested in Biocon in May 2003 and later exited in 2004 soon after the company went public and got listed.

(Edited by Joby Puthuparampil Johnson)

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