India Value Fund buying 10% in Biocon’s research arm Syngene for $62M

Mid-market buyout specialist private equity firm India Value Fund Advisors (IVFA) is picking 10 per cent stake in Syngene International Ltd, a step down research subsidiary of Biocon Ltd, for Rs 380 crore ($62.2 million).

VCCircle had first reported that the company is looking to raise around $50 million in PE funding.

IVFA is routing the investment through its vehicle Silver Leaf Oak (Mauritius) Ltd. It is buying 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 will jointly hold 85.54 per cent stake in Syngene.

The deal values 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. Early this month Biocon bought back this stake for Rs 215.4 crore, which valued Syngene at Rs 2,800 crore ($470 million).

IVFA's investment values Syngene 22 per cent higher on a pre-money basis compared with the buy-back transaction involving GE Capital.

“We had partnered with Biocon through our first fund in 2003. We are excited to partner with them again. Syngene has emerged as one of the leading service providers globally for integrated discovery and development with a marquee client base,” Vishal Nevatia, managing partner at IVFA, said in a press statement.

This is the fourth transaction for IVFA this year and the third addition to its portfolio. Early this year it invested more in existing portfolio firm Aster DM Healthcare, which is now close to filing documents for its proposed IPO. In addition it bought majority stake in pest management services provider Hicare Services (earlier ISS Hicare) and bought out National Bulk Handling Corporation from FTIL.

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

Kiran Mazumdar-Shaw, Biocon’s chairperson and managing director, said, “This investment reflects Syngene’s leading position in the contract research and manufacturing space in Asia, acknowledging its comprehensive multidisciplinary capabilities. This transaction is part of the overall strategic plan for Syngene and sets a new benchmark as we prepare the company for listing.”

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)

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