Capital markets regulator Securities and Exchange Board of India (SEBI) has issued final observation on the initial public offering (IPO) application of Syngene International. The research arm of biotechnology major Biocon, had filed its draft red herring prospectus (DRHP) with SEBI through its lead merchant banker Axis Capital in April. The regulator issued its final observations on the draft offer documents on 12 June which is necessary for companies to launch any public offer.
The IPO comprises of an offer for sale (OFS) of 2.2 crore shares by Biocon. This will include a reservation of up to 20 lakh shares for Biocon shareholders. Biocon sold 10% stake in Bangalore-based Syngene for INR380 crore to IVF (India Value Fund) Trustee Company. The transaction reduced Biocon’s stake in Syngene to 83.6% and the IPO is further likely to result in the erosion of 11%. While Biocon did not comment on the amount to be raised through the IPO, it could be around INR600 crore. Since it is completely an OFS issue, Syngene wouldn’t receive any funds from the IPO.
As of December 2014, Syngene had no long-term borrowings, although short-term borrowings stood at INR183 crore.
In April, Biocon chairman and managing director Kiran Mazumdar-Shaw had said that the listing could be by July if all the approvals come on time. 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.