Private equity firm New Silk Route (NSR) is picking up a stake in Chandigarh-based pharmaceuticals company Nectar Lifesciences Limited.

The company informed the exchanges on Tuesday that it will allot 26 million equity shares on a preferential basis to NSR Direct PE Mauritius, LLC. Though Nectar did not give the price at which the shares will be sold, the deal could mean an investment of Rs 100 crore based on Tuesday’s closing price of Rs 38.65.

The shares of the firm fell by nearly 3.5% in the morning trade on Wednesday to Rs 37.30 before recovering to Rs 38 levels.

NSR could end up with a 14.6% stake post dilution, based on VCCircle calculation, just shy of the mandatory open offer limit. Also, since Nectar is also planning to raise Rs 250 crore through routes like GDRs, ADRs, FCCBs, QIP or convertible debentures, it could lead to a dilution in NSR's stake. The proposals have been approved by the board and the company is now awaiting shareholders approval at its Extra-Ordinary General Meeting (EGM) on February 11, 2010.

Nectar reported revenues of Rs 731 crore and a net profit of Rs 53 crore in FY09. The company manufactures oral and sterile active pharmaceutical ingredients (APIs), finished dosages and phytochemicals. Nectar has recently opened a plant in Punjab which would help it expand its presence in therapeutic spaces such as oncology, cardiovascular, anti-diabetics and anti- HIV segment. The company is reportedly planning to spend Rs 600 crore on this facility.

New Silk Route was founded in 2006 and has over $1.4 billion under management with a focus on the Indian subcontinent and the Middle East. Its other recent investments include edible oil firm KS Oils and Dawnay Day AV Group India, which has been renamed as Destimoney.

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