Vivimed sells 24.6% stake to PE firms

Hyderabad: Specialty chemicals and drug maker Vivimed Labs Ltdhas raised Rs. 127 crore from private equity investors by selling almost a quarter of itself, intending to use the proceeds to fund expansion.

The Hyderabad-based firm made a preferential allotment of shares to Mauritius-based NYLIM Jacob Ballas India Fund III and Kitara Capital, based in West Asia, equivalent to a combined 24.6% stake, it said. NYLIM Jacob Ballas purchased a 13.2% stake for Rs. 67 crore at Rs. 315 per share and Kitara bought 11.4% for Rs. 60 crore at Rs. 327 a share.

The money raised will fund Vivimed’s expansion plans for speciality chemicals at its existing locations in Bidar (Karnataka), Hyderabad, a new project near Visakhapatnam and a US Food and Drug Administration-compliant drug factory in Choutuppal, near Hyderabad, as it seeks to more than double revenue by March 2013.

Vivimed has a commitment of raising $20 million from International Finance Corp., a World Bank arm, of which it recently raised $7.5 million through a sale of foreign currency convertible bonds. “In 12-18 months, the production is expected to begin at the new facilities,” Santosh Varalwar, managing director and chief executive officer of Vivimed Labs, said on telephone.

The expansion plans will help the company increase revenue to Rs. 1,000 crore by the 2013 fiscal year, said Varalwar, who said it had been the “need of the hour to ensure funding”. Vivimed Labs was in talks to buy Uquifa SA of Spain for $55 million (around Rs. 270 crore), Mint reported on 20 September. “The company plans to grow both organically and inorganically. The equity sold today will help them to achieve their objective of Rs. 1,000 crore (in revenue),” said Vishal Jajoo, Mumbai-based senior research analyst at Nirmal Bang Securities Pvt. Ltd.

Vivimed Labs, a 20-year-old company, has five factories in India. It has overseas units Vivimed Labs Europe Ltd (in the UK) and Vivimed Labs USA Inc. to market its personal and healthcare products, including pharmaceuticals, skin and hair care products.

Vivimed reported Rs. 416 crore in revenue for the fiscal year ended March with a net profit of Rs. 48.83 crore, posting 21% growth in sales and 57% growth in net profit. On Tuesday, Vivimed shares gained Rs. 1.90, or 0.81%, to Rs. 236.05 at the close of trading on BSE. The benchmark Sensex rose 472.93 points, or 2.95%, to 16,524.03. Veda Corporate Advisors, Chennai, acted as advisor to Vivimed on the transaction.