Kitara Capital raising stake in Vivimed Labs

Mumbai-based private equity firm Kitara Capital, which is focused on investing in public market firms, is raising its holding in mid-size drugmaker Vivimed Labs by investing Rs 15.7 crore ($2.6 million) through a preferential allotment, as per a stock market disclosure.

Vivimed Labs will issue 5 lakh equity convertible warrants to Kitara at a price of Rs 315 a share. This comes along with a preferential allotment of convertible warrants to the promoters which would bag up to Rs 47.25 crore for the firm.

An extraordinary general meeting of the company is scheduled to be help on September 4, 2014 for obtaining shareholders’ approval for the proposed preferential issues.

Kitara had previously invested Rs 60 crore three years ago as part of a larger fundraising by the company where Jacob Ballas had invested Rs 67 crore. Kitara had picked up shares at Rs 327 a piece then.

Vivimed last traded at Rs 307.5 a share, up 3 per cent on the BSE in a strong Mumbai market on Tuesday. Kitara’s existing investment is marginally underwater.

It currently holds 11.29 per cent stake in Vivimed which would move to 12.8 per cent assuming full conversion of warrants into equity by both Kitara and the Vivimed promoters.

It would also become the single largest institutional shareholder marginally surpassing the stake held by Jacob Ballas.

Last year Hyderabad-based Vivimed Labs Ltd, which manufactures specialty chemicals and pharmaceuticals, had struck a deal to acquire the solid oral dosage (SOD) manufacturing facility owned by the US drugmaker Watson Pharmaceuticals Inc and located in Tamil Nadu, for Rs 122 crore ($20 million).

Besides acquiring the facility, it entered into a contract manufacturing agreement with the Actavis Group for a defined period, which was another revenue stream for Vivimed.

Earlier it had acquired Hyderabad-based Finoso Pharma for Rs 15 crore. Also in 2011, it made its single-biggest acquisition overseas when it bought the API manufacturer Uquifa (it has intermediates and operations in Spain and Mexico) for Rs 286 crore. In the same year, Vivimed acquired Octtantis Nobel Labs and Klar Sehen Pvt Ltd.

(Edited by Joby Puthuparampil Johnson)

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