Biocon to buy back GE Capital stake in Syngene for Rs215 crore
09 September 2014
Biocon Ltd is buying back a 7.69-per cent stake in its research services arm Syngene from a unit of GE Capital, for Rs215.38 crore ($35.48 million), valuing the research arm at around Rs2,800 crore.
The buyback is being made through Biocon Research Limited, a wholly owned subsidiary of Biocon.
GE Equity International Mauritius, which had invested Rs125 crore during end-October 2012 in Syngene is exiting it with healthy Rs90 crore profit. GE's acquisition of the stake had valued Syngene at Rs1,625 crore at that time.
Syngene is involved in pharmaceutical contract research and manufacturing and works with 16 of the top 20 pharmaceutical companies in the world, including Bristol-Myers Squibb, Baxter and Abbott Nutrition among others.
The research services arm accounts for around a fourth of Biocon's revenues of Rs2,900 crore on an annualised basis.
Biocon had previously announced plans to take Syngene public, but has not given a timeline. Biocon chairperson and managing director Kiran Mazumdar Shaw has been maintaining that there are lots of elements that have to be put in place before taking Biocon's research arm public. The market though was anticipating a public offer during the current fiscal.
Biocon's decision to defer plans to take its research arm public comes in the backdrop of legal hurdles to the aggressive growth of clinical research services in the country.
However, Biocon's spokesperson said that the company would continue to evaluate the situation for a listing but there is not specific timeline for it.
Syngene is among the top three clinical research organisations in India and it employs around 2,000 researchers working extensively with various global companies, including key drug research.
Biocon has so far invested around Rs800 crore in the clinical research service business.