Pharma co to use funding for its growth plans
HyderabadMay 9Granules India Ltd has decided to rope in International Finance Corporation (IFC), the World Bank's private sector arm, as a strategic investor, to fuel its growth plans.
IFC will join Ridgeback Capital Investments and ISP Investco of the US that have already agreed to invest around $5 million each through equity participation in Granules India. IFC's investment would work out to $6 million. Ridgeback Capital holds 14.5 per cent stake in the company, while ISP Investco holds 13 per cent.
According to a Granules India notice to the stock exchanges on the development, IFC has agreed to subscribe up to 22 lakh equity shares of the company of the face value of Rs 10 each (which will be 11.48 per cent of the post-issue capital) subject to the approval of board of directors and shareholders of the company.
The company said its board of directors at the meeting today passed a resolution recommending the approval of shareholders for issuing up to 22 lakh shares to IFC at a price of Rs 118.10 per share.
Mr C. Krishna Prasad, Managing Director of the company, said, "This would be the last round of major equity dilution for the company in the foreseeable future and marks the completion of the current fund raising exercise that Granules announced in December."
Long term loan
IFC is also considering a long term loan (10 years) assistance of $9 million to the company, Mr Prasad said, adding that "We are looking forward to this investment of debt/equity, which will strengthen the company's balance sheet and gear us for delivering the high growth contemplated by us."
Granules, a formulation intermediates company, had taken EGM nod to raise $25 million through FCCBs or other instruments in December 2006 for funding expansion projects and foreign acquisitions. Instead of FCCBs, the company has been able to raise the funds through a combination of strategic investors and long term loan, Mr Krishna Prasad told
Post the strategic equity divestments of shares and warrants, Mr C. Krishna Prasad and family, the main promoters of the company, would retain a stake of around 35 per cent in the company.