Strides Arcolab, the Bangalore-headquartered Rs 1,800 crore publicly-held mid-size pharmaceutical company, has raised $100 million (Rs 450 crore) through a qualified institutional placement (QIP) issue.
“We have successfully raised $100 million through the QIP route which will be used to part-repay the debt incurred for our recent acquisitions,” T S Rangan, group chief financial officer of Strides Arcolab, said.
The drug firm had fixed the floor price of the issue at Rs 423.55 and mandated Daiwa Capital Markets, IDFC, Kotak Mahindra Capital and RBS Equities as the lead managers. Qualified institutional placement is a route which many Indian companies are tapping into as it’s a relatively quick process of raising money through a private placement of shares or convertible securities with institutional buyers.
However, he declined to comment on the dilution of stake after the QIP.
Strides Arcolab, in the recent past, has been pretty active in the acquisitions scenario. This March, Strides bought half the equity in Aspen Pharmaceuticals, a South African generics’ drugmaker, for $117 million (Rs 530 crore). It also acquired Aspen’s unit in Brazil for $75 million, taking the acquisition costs to $192 million (nearly Rs 900 crore). It is understood that $67 million (Rs 300 crore) has already been paid and another $25 million (Rs 112 crore) is expected to be paid by the end of this calendar year.
More than half of this initial payout is understood to have been funded from the receipt of licensing fee and internal accruals from a major outsourcing deal it signed with Pfizer during late 2009. According to market information, Strides has time till the end of 2011 to pay the remaining amount.
Industry experts are of the opinion that present fund raising along with milestone payment from Pfizer deal will suffice to cover the recent acquisition costs of the company.
The company has been seeing an upswing ever since it signed a deal with American drug maker Pfizer. The collaboration was expected to see Strides manufacture 40 off-patent sterile injectables and oral medicines, to then be sold in the US market by Pfizer. The deal has now been expanded to include newer geographies and Pfizer will take these products to the EU, Canada, Australia, New Zealand, Japan and Korea.
While the financial terms have not been disclosed, the quantum of the deal is visible from Strides paying in cash for its recent acquisitions. Strides has managed to pay out nearly a third of the Rs 900 crore which it has to pay for its recent acquisitions.
The company had 129 filings before various health regulators by March-end, of which 32 are in pharma and 97 in the specialities space.
It has already received 38 approvals as of now and is waiting for the remaining 91 drug approvals from the US health regulator. The mid-size pharma company has 14 manufacturing facilities in six countries, including its joint venture with Aspen in India.
The company posted close to 10 per cent rise in its net profit to Rs 45.75 crore for its second quarter (April-June) of 2010 on the back of sound growth in its specialities business. The total revenues of the company witnessed a 56 per cent rise to Rs 484 crore during the second quarter of the calender year. Operating profit of the company also rose to Rs 131 crore, compared to Rs 34 crore an year earlier.
Shares of the company were down nearly 1 per cent to close at Rs 431.05 on the Bombay Stock Exchange while Sensex was up by 0.93 per cent to close at 20, 045 points in today’s session.
