Biotech major Biocon has released details for the initial public offering (IPO) of its research subsidiary Syngene International. The company has set a price band of INR240-250 per share for the IPO which will see Biocon offloading 2.2 crore in the market. The IPO will remain open between 27 and 29 July for subscription. Of the total shares on offer, 50% portion of this IPO has been reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs aka high net-worth individuals or HNIs) while the remaining 35% has been reserved for retail investors with application amount of less than INR2 lakh. This will include a reservation of up to 20 lakh shares for Biocon shareholders. The issue will be managed by Axis Capital Limited, Credit Suisse Securities (India) Private Limited, and Jefferies India Private Limited.
At the upper price band, the IPO is expected to yield INR550 crore. Since the issue is essentially an offer for sale (OFS) by Biocon, Syngene International will not receive any proceeds from the offer. Biocon currently owns 83.6% stake in Syngene and is looking to divest 11% stake through the IPO. In January, Biocon sold 10% stake in Bangalore-based Syngene for INR380 crore to IVF (India Value Fund) Trustee Company. As of December 2014, Syngene had no long-term borrowings, although short-term borrowings stood at INR183 crore.
Syngene International filed its draft red herring prospectus (DRHP) with market regulator SEBI in April and received approval in June. This marked the fastest IPO approval by SEBI this year. The regulator cleared the application in a matter of just 51 days which also includes weekends.
The public listing of Syngene, which offers integrated drug discovery and development services with capabilities in medicinal chemistry, biology, in vivo pharmacology and toxicology has been much-delayed. The plan had remained unexecuted since 2012 due to uncertainties in the global and domestic economic environment. Syngene has a research team of 2,300 scientists. Syngene is planning capex of USD200-250 million for expansion, new capacity and greenfield expansion over the next five years.