Biocon to Sell 7.69% of Research Unit to GE Capital for INR1.25 Billion
BANGALORE–Biocon Ltd. (532523.BY) Wednesday said a GECapital unit will pay 1.25 billion rupees ($23 million) to buy a 7.69% stake in its research services unit, which is looking at conducting an initial public offering.
The GE Capital offer values the research unit — Syngene International Ltd. — at 16.25 billion rupees, establishing a “base value” for the company, Biocon Chairman and Managing Director Kiran Mazumdar-Shaw told Dow Jones Newswires.
This will “ensure that, once we go to the market, we’ll get an optimum valuation,” said Ms. Mazumdar-Shaw.
Syngene provides discovery and development services to global drug makers such as Abbott Laboratories (ABT) and Bristol-Myers Squibb Co. (BMY).
Biocon, India’s biggest biotechnology company by revenue, is planning an initial public offering for Syngene to raise funds for the unit’s growing capital expenditure needs. The company hasn’t revealed any details of the IPO.
Ms. Mazumdar-Shaw said that while the GE investment is a “good milestone,” a listing for Syngene is likely to happen some time in the next financial year starting April 1, 2013.
The ongoing capital market volatility will need to settle down for Syngene to go ahead, she added.
Syngene reported sales of nearly 2.50 billion rupees in the six months through Sept. 30. It didn’t provide a net profit figure.
Besides making MRI machines and CT scanners, incubators and blood-pressure monitors, GE‘s healthcare business is also involved in drug discovery and developing manufacturing technologies for biopharmaceutical companies.
Biocon is a frontrunner among Indian companies developing biopharmaceuticals, which use proteins manufactured in living cells, rather than chemical-based drugs.
It sells biopharmaceuticals, including human insulin and monoclonal antibodies, in India and overseas.
Biocon Wednesday reported a 4.6% rise in its net profit for the quarter through September to 896 million rupees from 857 million rupees a year earlier. Total sales grew 18% from a year earlier to 5.92 billion rupees.
Operating costs increased 22% to 4.76 billion rupees as research and development expenses jumped 40% because of ongoing drug trials.
Still, Biocon shares closed the day 2.6% higher at 265.55 rupees in a Bombay Stock Exchange market up 0.4%
In the six months through September, Biocon’s net profit rose 8.3% to 1.69 billion rupees while revenue rose 23% to 11.63 billion rupees.