Avesthagen plans pre-IPO restructuring

In the run-up to its public float slated for the next financial year, Avestha Gengraine Technologies is restructuring its businesses into four separate strategic business units (SBUs).

The restructuring, which began four months ago, has segregated company's businesses into bio-pharmaceuticals, bio-nutritionals, bio-agri and science innovations - early patent partnerships for developing new products.

Avesthagen vice-chairperson and CEO Viloo Morawala Patell said post- IPO, the SBUs would be spun off into separate companies. Viloo Patell added that the restructuring would be completed by this October, when the company plans to begin discussions on the IPO.

The bio-agri business is headed by Deepak Mallik, former managing director of Advanta, bio-nutritional business by Ronnie Khajotia and bio-pharma by Bruce Murdock. Villoo herself will handle the early patents business.

The company is also in the process of acquiring two-seed companies in the agri and vegetable seeds businesses in Hyderabad and Bangalore. Viloo Patell said due diligence was on and the acquisition would be announced by next month. She, however, refused to divulge the details.

Viloo Patell said seeds with environmental stress and pest tolerances, developed by Avesthagen, would be rolled out by these companies for vegetables and field crops by June this year. The company has two JVs with Swiss major Limagrain for developing specialty seeds with resistance properties.

Avesthagen recently acquired Bollywood actor Waheeda Rehman's organic foods company, Good Earth Foods. Viloo Patell said bio-nutritional business would begin to roll out bio-active food products by this year-end. Viloo Patell said there are two JVs with Nestle and Groupe Danone for product development.

Avesthagen has completed its fourth-round of funding for ¤ 32 million with Fidelity, Groupe Danone and Limagrain picking up 10, 5 and 5 per cent stakes, respectively.

While two biotechnology companies are expected to stay post-IPO, Fidelity, which has come as a pure equity partner, may exit after the IPO, Patell said. Tata Industries (3.8 per cent), the Adi Godrej group (six per cent), Cipla (5 per cent), the French Bio-Meriuex group (5 per cent) and ICICI Ventures (18 per cent) hold stakes in the company. Bennett, Coleman & Co holds 1 per cent stake in the company.

Avesthagen is currently valued at ¤115 million mainly on the strength of its patent portfolio and is expected to dilute around 10 per cent. Patell, however, indicated that the dilution could be more than 10 per cent. "It depends on the demand. We are yet to begin discussions with the bankers," she said.