The private equity arm of GE Capital is acquiring stake in a subsidiary of Bangalore-based biotechnology company Biocon Ltd for Rs 125 crore ($23 million). GE Equity International Mauritius is picking up 7.69 per cent stake in Syngene International, the contract research organisation (CRO) arm of Biocon.
The deal will value Syngene, which is looking at an initial public offering (IPO), at Rs 1,625 crore. Biocon added that the investment is subject to standard condition precedents including regulatory approvals.
Biocon scrip closed at Rs 258.95 on Tuesday, down 1.45 per cent in a Mumbai market down 1.1 per cent. However, it opened at Rs 262 on Wednesday morning, up 1.18 per cent, as the company reported 23 per cent increase in revenues for the first six months of FY13.
“GE Capital’s investment in Syngene is a validation of our research services business model which has delivered consistent value to our partners as well as other stakeholders. This takes us closer to our commitment of taking Syngene through an IPO at the most opportune time,” said Kiran Mazumdar-Shaw, chairman & managing director of Biocon.
In FY12, Syngene recorded 29 per cent growth in top line to Rs 418.2 crore, compared to Rs 323 crore in FY11. Syngene’s EBIDTA margin for the year was 34 per cent, with the operational margin at Rs 140.4 crore, compared to Rs 100.6 crore last year – a growth of 40 per cent.
For H1 FY13, the research business (both of Syngene and Clinigene, another subsidiary of Biocon) reported a growth of 40 per cent to Rs 252 crore, according to its latest results released today.
Syngene offers discovery and preclinical development services across small molecule chemicals and large molecule biologics, including monoclonal antibodies and proteins. Clinigene provides clinical development services in the conduct of phase I and BE studies, and phase II-III trials in patients. Biocon sold its stake in Clinigene to Syngene to consolidate the business in February this year.
Syngene’s clientele includes businesses across the biopharma and speciality pharma including Bristol Myers Squibb, Pfizer, Merck and Abbott Nutrition.
(Edited by Sanghamitra Mandal)