Private equity firm Carlyle will be sitting on gross unrealised gain of 2.3x at the upper end of the price band for the initial public offer of Claris Lifesciences. The Ahmedabad-based pharma company is looking at raising Rs 300 crore and has fixed the price band at Rs 278-293 per share. Claris issue opens for subscription from November 24-26, 2010.

Carlye, through First Carlyle Ventures III, had invested $20 million (Rs 90 crore) in Claris Lifesciences in March 2006, through preferential shares that represents 13.89% stake currently. Its average cost of purchase works out to be around Rs 127 a piece. Carlyle’s investment was to fund expansion in capacity, establishing new facilities, R&D and product development initiatives.

The fresh public issue is expected to lead to dilution of around 16.6% equity, which will bring down Carlyle’s stake to 11.6%. The promoters, who own 86% at present, will hold around 70%.

Claris plans to use the IPO funds to set up some new manufacturing lines besides repayment of Rs 50-crore term loan. The 10-year-old firm’s product basket includes the high-end critical care segments such as clinical nutrition, anesthesia, blood products, plasma expanders, transplant, dialysis, anti-infectives, and cardiology.

For the year ended December’09, Claris had total revenue of Rs 760 crore with net profit of Rs 125 crore. Its overseas business has contributed about 54% or Rs 406 crore of the company’s revenue, according to DRHP data. It has presence in 76 countries.

With 16.6% equity dilution, the company could be looking at an EPS of around Rs 20.39 on its FY’09 earnings post issue translating into a P/E multiple of around 14 given the price band. This would give it a market cap of around Rs 1,796 crore or $400 million.

Incidentally, US-based private equity major TA Associates is believed to be in initial talks to acquire a minority stake in Claris Lifesciences and as reported by VCCircle, TA is likely to acquire a part of the stake held by Carlyle.

JM Financial Consultants, Edelweiss, ICICI Securities and Enam Securities are the lead managers to the issue.

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