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Exclusive | Goldman Sachs Private Equity in talks to buy minority stake in IPO-bound Biocon Biologics

If the deal — which may value the firm in excess of $3.5 billion — fructifies, it would mark the third successive investment in 2020 for Kiran Mazumdar Shaw-led Biocon Biologics

October 02, 2020 / 05:04 PM IST

The private equity arm of Wall Street powerhouse Goldman Sachs is in talks to buy a minority stake in Biocon Biologics, India’s top pure-play biosimilar firm, people familiar with the matter told Moneycontrol

Biocon Biologics is a division of Kiran Mazumdar Shaw-led Biocon and is due to launch an initial public offering (IPO).

If the deal fructifies, it would mark the third successive investment for Biocon Biologics in 2020. Private equity player True North and Tata Capital Growth Fund previously invested in the company, the last deal earning Biocon Biologics a pre-money equity valuation of $3.5 billion.

What is the valuation?


“This proposed deal is part of the $200-$300 million combined fund-raising exercise initiated by Biocon Biologics as it looks to build value, strengthen its business and grow rapidly prior to its listing. The firm wants to invest in its research and development and manufacturing infrastructure capabilities,” said one of the sources cited above.

“Goldman Sachs may invest between $100 million and $200 million in Biocon Biologics in this round. The talks are on and the Biocon management is keen to get on board a blue-chip global investor like Goldman Sachs for its subsidiary,” said a second source.

“This fund-raising round is likely to value Biocon Biologics at a premium to the $3.5 billion equity valuation it received in the last transaction. The private equity arm of Goldman Sachs has got new executives on board and is looking at investments in India with renewed vigour and is likely to be more aggressive in the days ahead,” said a third person.

All the three individuals spoke to Moneycontrol on the condition of anonymity.

Goldman Sachs declined to comment. A Biocon Biologics spokesperson said, “Biocon Biologics has unlocked value through two PE investments earlier this year and is in talks with several other equity firms/investment banks to unlock value as previously indicated. We cannot share any specifics at this time.”

Biocon Biologics: The road to a big-bang listing

Biocon Biologics, which has set a target of serving 5 million patients and clocking $1billion in revenue in FY22,

has raised $105 million so far through two deals. That includes a fund infusion of $30 million by Tata Capital Growth Fund in exchange for a 0.85 percent stake and $75 million from True North for a 2.44 percent stake.

“Biocon Biologics plans to invest $200 million per year in capex for FY21 and FY22. This unlocking of value through PE funding will enable us to fund capex investments for further strengthening our business. As the biosimilars business scales up and generates good margins, it will also generate operating cash to fund our investment objectives,” said Chinappa MB, CFO, Biocon Biologics, in an interview in August. He added that the firm intends to list on the domestic capital markets in the next two to three years.

A biosimilar product is a biologic product which is approved based on demonstrating that it is highly similar to a biologic product (reference product) approved by regulators. Clinically, it has no meaningful differences in terms of safety and effectiveness from the reference product.

According to research report estimates, the global market for biosimilars is expected to grow at a compounded annual growth rate (CAGR) of 24.7 percent to $35.7 billion by 2025 from $11.8 billion in 2020. The segment is experiencing significant growth due to rising cases of chronic diseases and increasing demand for biosimilars due to their cost-effectiveness.

Goldman Sachs Group has invested in a raft of Indian businesses such as online furniture company Pepperfry, cloud kitchen brand Rebel Foods, rental startup Nestaway, Azure Hospitalty, the owner of restaurant brand Mamagoto, budget hotel chain FabHotels, among others.

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Ashwin Mohan
first published: Oct 1, 2020 09:29 pm
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