Biocon's Fundraise To Provide Investor Exits Closes Listing Window For Unit

Bengaluru-based Biocon Ltd. closes the window to list its arm, Biocon Biologics Ltd., as it raises Rs 4,500 crore to provide exits to private equity investors of its subsidiary, according to the disclosure made in the draft information memorandum of its qualified institutional placement.

The buyback of securities follows Biocon not being able to provide a timeline for exits to the investors.

"Given the market volatility that we are seeing on the IPO front, I think the Board was of the opinion that we should look at other strategic options, which also include evaluating a merger," said Kiran Majumdar Shaw, chairperson at Biocon Ltd. to analysts during the fourth quarter earnings call. At this point in time, the board has set up a committee to recommend strategic options to the board, she added.

India's largest biotech firm is seeking to raise Rs 4,500 crore or 11.6% of the current equity base via QIP.

The funds will be used to redeem the Optionally Convertible Debentures issued to Goldman Sachs entities. The OCD was to convert in 61 months into 41.11 million shares of Biocon Biologics at a price of Rs 273.65 apiece.

The company plans to use Rs 1,710 crore to redeem these OCDs. At the buyback amount, Biocon paid Rs 416 apiece for Biocon Biologics shares (post OCD conversion to shares), giving the subsidiary a value of Rs 69,719 crore or little over $8 billion. Biocon will hold 73.84% in the subsidiary post buyback from Goldman Sachs entities.

Further it also plans to pre-pay financial commitments that are up for redemption in the next 12 months.

Biocon Biologics issued 10.68 million unsecured, redeemable, 12% compulsorily convertible debentures with a variable coupon on a private placement basis for Rs 300 crore to ESOF III Investment Fund and Edelweiss Alternative Asset Advisors Ltd. It also issued equity shares to Tata Capital Growth Fund-II and Activ Pine LLP, for an aggregate value of Rs 461.3 crore in 2020. The tenure of these instruments was 4-6 years.

Biocon provided financial commitment to provide exit to these investors as per the shareholder agreement it signed in May 2023. The terms include a listing of the Biocon Biologics within a time frame, and if the liquidity event does not occur within the agreed timelines, Biocon is required to buy back the securities issued to investors by its subsidiary, at a commercially agreed price.

The company disclosed that at the end of March 31, 2025, the gross liability on account of these obligations stood at Rs 1,418.6 crore on a consolidated basis. It will use a portion of the QIP to settle these financial commitments.

Biocon had a standalone debt of Rs 2,871 crore and Rs 17,755.5 crore on a consolidated basis. This consolidated debt will be reduced by nearly Rs 3,000 crore once the firm provides exit to OCD and CCDs holders and equity investors in the near future.