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AIG, Warburg want stake in India's Biocon

Funds managed by American International Group and Warburg Pincus are interested in buying a stake in India's largest biotechnology company, Biocon India Ltd, a merchant banking source told Reuters on Monday.

They are looking at the nearly 15 per cent stake in Biocon held by ICICI Venture Funds Management Company Ltd, the venture capital arm of India's largest private-sector bank, ICICI Bank, said the source, who declined to be identified.

"AIG and Warburg are among a handful of funds interested in Biocon," the source said.

"The potential buyers are currently talking to Biocon directly, but a lot depends on whether ICICI Ventures can be persuaded to sell out at a reasonable price."

He said ICICI was unwilling to part with its stake for less than Rs 600 million, which would value unlisted Biocon at around Rs 4 billion.

Biocon has attracted interest from private equity funds as they see India's biotechnology sector as the next growth industry after software. The company also plans to go public next year.

Founded in 1978, Bangalore-based Biocon makes a wide range of biotech products including enzymes for industrial use and pharmaceuticals. It had sales of Rs 2 billion for the financial year ended March 31, 2002.

Its chairman, Kiran Mazumdar-Shaw, declined to comment on a possible stake sale when reached by Reuters, as did Sumit Chandwani, head private equity at ICICI Venture, and Dalip Pathak, Warburg Pincus' managing partner for South and Southeast Asia. A spokesman for AIG was not reachable.

If ICICI Venture did not get a good enough offer, it planned to hold on to its stake till Biocon went public, the merchant banking source said.

Mazumdar-Shaw, who along with her family owns 70 per cent of Biocon, said the company planned to hit the market with an initial public offering in the second half of 2003.

"We hope to get valuations better than Indian pharmaceutical companies," she said.

The company plans to use the funds raised towards setting up a new Rs 750-million manufacturing unit in Bangalore and a Rs 250-million human insulin unit and for research.

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