Citigroup to finalise Rs 300-cr equity investment deal in Lupin

Nisha Das
09 May 2003

Mumbai: Citigroup Venture Capital, a Citibank subsidiary, is on the verge of finalising a Rs 300-crore equity investment deal in Lupin, the third largest pharma company in India. Citigroup is likely to complete its due diligence by the end of the month to pick up a 26-per cent stake of Lupin''s Indian promoter, D B Gupta.

When contacted, the Lupin management declined to comment on this development. However, Gupta had earlier said that the company has taken up a financial restructuring programme and was scouting for a strategic financial investor. Lupin has a debt burden of around Rs 600 crore.

According to sources close to the development, as per the current plan, Citigroup will pick up equities in Lupin at Rs 225 per share, a premium of almost 43 per cent from the current level of Rs 157 per share.

Citigroup is planning to take a direct exposure of around Rs 300 crore in Lupin by acquiring the Indian promoters'' equity, which will be followed by an open offer. As per Securities and Exchange Board of India regulations, a company acquiring 15 per cent in another company can also make an open offer, if so chooses.

The Lupin scrip has registered a gain of Rs 34 over a period of one month. The scrip was quoting at Rs 123 on 1 April 2003, and closed at Rs 157 on Wednesday. Once the deal is over, Gupta''s exposure in the company will come down to 40 per cent from the current 66 per cent.

Lupin is the market leader in the refampicin and refampicin 5 (intermediary), which are antibiotics used primary for the treatment of tuberculosis.