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  • Shasun Pharmaceuticals manufactures APIs, intermediates and enteric coating excipients with significant presence in key generic products.
  • Shasun has a global presence with manufacturing and research facilities in India and UK and marketing offices in US and Japan.
  • Shasun is one of world's largest producers of Ibuprofen. It is also one of the major producers of Gabapentin and Nizatidine.
  • OrbiMed is the world's largest healthcare-dedicated investment firm, with approximately $5 billion in assets under management.
  • OrbiMed's investment advisory business was founded in 1989 with a vision to invest across the spectrum of healthcare companies.
  • Orbimed supports its portfolio companies in achieving strategic, financial and operational objectives via participation at the board level.

Transaction Summary

  • Preferential Issue size (Rs. Crs)
  • - % Dilution 1
  • Offer price per share (Rs.)
  • - Premium to 6M Avg. price (%)
  • 50
  • 11.6%
  • 76
  • 28%
  • Post Money Market Cap1 (Rs. Crs)
  • Enterprise Value (Rs. Crs)
  • EV / LTM EBITDA (x)2
  • Price / LTM EPS (x)2
  • 430
  • 818
  • 6.1x
  • 8.2x

Transaction Highlights

On March 30, 2012, Shasun allotted 6.58 million shares at Rs.76/- per share on preferential basis to Caduceus Asia Mauritius, an investment arm of OrbiMed. The new investor will hold 11.62% of the fully diluted post share issue capital of the company.

Transaction Rationale

  • Capex Plans: Shasun has outlined a huge capex plan of approx. Rs.250 Crs in FY 13. The proceeds from the issue would be used to part fund the capex plans.
  • Bolstering Networth: Forex losses over the last few years resulted in erosion of networth of Shasun. New Equity infusion will help in bolstering the eroded networth and improve the debt equity mix.
  • OrbiMed’s investment is likely to boost the investor sentiments and also build confidence amongst Shasun’s clients.

Share Price Performance

  • LifeCell is India's largest & most accredited stem cell bank and the first to bring the revolutionary concept of umbilical cord stem cell banking to India in 2004. LifeCell has a technological collaboration with Cryo-Cell International USA - world’s first private stem cell bank.
  • LifeCell has received many International accreditations from AABB, CAP, and NABL. LifeCell is the first company in India to receive prestigious AABB accreditation for cord blood banking
  • LifeCell has strongly established its leadership position in the industry, with its coverage extending to over 100 cities and towns in India.
  • As on March 2013, over 65,000 parents have preserved their baby’s cord blood stem cells with LifeCell.
  • Helion is a multi-stage, India-focused venture fund with over $600 million under management.
  • The fund invests in businesses that are technology-powered or catering to the Indian consumer services space.
  • The focus sectors of investment include - internet, mobile, technology products, outsourcing, Healthcare, education, retail services and financial services.
  • The fund's investors are well-respected global institutions including top tier university endowment funds, sovereign funds, foundations, pension funds, family offices and Fund of funds.

Transaction Highlights

  • Helion Venture Partners (HVP) invested Rs. 35 Crs in LifeCell; with this investment HVP became the first the first venture capital firm to invest in a stem cell banking company in India.
  • With over 27 million births every year, India is the largest birthing country in the world. However stem cell banking in India is still a very nascent stage with only 2 per thousand parents opting to preserve their child’s stem cells at birth, compared with 50 per thousand in the US, and 250 per thousand in Singapore.
  • LifeCell intends to use the funds for expanding its stem cell banking operations. With the increase in awareness and affordability of stem cell banking, LifeCell expects the market to expand rapidly.

Role of Malabar Capital Advisors

  • Malabar Capital Advisors acted as Sole Financial Advisors to LifeCell International in the fundraising process
  • We worked very closely with the LifeCell team in the entire fundraising process; advising and assisting them on various aspects such as preparation of business plan, investor meetings/ presentation, valuation advisory, transaction structuring etc.

Shriram EPC and Orient Green Power – Restructuring

On 22-Feb-2013 Shriram Group announced a multiple transactions as a part of restructuring process of Shriram EPC (SEPC) and Orient Green Power (OGPL) and reorganization of the Shriram Group shareholding in these companies. The transactions for which shareholder approval was sought through postal ballot were:

  • Sale and transfer of shares of subsidiaries and JVs of Shriram EPC, viz. SSCPL, Leightner Shriram, Shriram Hammon, SEPC Singapore (holds economic interest of 21.1% in OGPL), and Blackstone Tech. (Sale Transaction) to Shriram Industrial Holdings Private Ltd (SIHPL).
  • OGPL to make a preferential Issue of Rs. 150 Crs to SIHPL at a share price of Rs. 15 per share

Pursuant to the Sale Transaction, SEPC Singapore becomes a direct wholly owned subsidiary of SIHPL resulting in the indirect acquisition of the shareholding and control of OGPL by SIHPL. The Sale Transaction and the Preferential Issue triggered an open offer requirement under the SEBI Takeover Code.

Holding Structure – Prior to re-organization1

Holding Structure – Reorganization process1

  • SEPC transfers investments in JVs subsidiaries to SIHPL. As a part of the transaction long term loans & advances due to SEPC by these transferred subsidiaries and JVs were also transferred to SIHPL
  • OGPL makes a preferential issue of 10 Cr shares at Rs. 15/ share to SIHPL
  • SIHPL along with PACs makes an open offer for 14.8 Cr shares of OGPL at Rs. 15/ share (26% of fully diluted share capital). 48.3% of these shares were finally acquired by SIHPL & PACs
  • Consideration paid to SEPC
  • - SEPC Singapore (OGPL) shares
  • - Other JV/ Associate shares
  • - Due from JV/Subsidiaries
  • Rs. Crs
  • 148.2
  • 117.4
  • 179.9
  • OGPL - Preferential Issue to SIHPL
  • OGPL open offer by SIHPL & PACs
  • TOTAL
  • 150.0
  • 106.9
  • 702.5

Rationale for the transaction

  • Provide liquidity to SEPC and improve its focus on contracting business
  • Re-organize the non-EPC industrial subsidiaries/JVs held by SEPC under SIHPL. These subsidiaries/JVs ae likely to have capital needs in the future and SIHPL has the ability to meet these needs
  • Proceeds from OGPL preferential issue to SIHPL will be used to fund the cost escalations in Beta Wind Farms (subsidiary of OGPL) which is developing 300MW wind power projects.
  • The above transactions along with the open offer increase the economic holding of Shriram Group in OGPL from 8.1% to 47.6%, thereby increasing the promoter’s focus on the business

Role of Malabar Capital Advisors

  • Detailed evaluation of the business of underlying subsidiary investments
  • Assessment of the impact of the SEBI ICDR and Takeover guidelines on the restructuring of the investments,
  • Evaluating various structures in conjunction with accounting/ legal and tax consultants
  • Valuation of subsidiaries/ JVs transferred
  • Assisting Shriram Group in discussion and negotiations with institutional shareholders in SEPC and OGPL.

Holding Structure – Post re-organization1

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