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Chitra Phadnis

BANGALORE, May 21

ICICI is likely to divest its 11 per cent stake in Biocon India which it had bought for $4 million a year-and-a-half ago.

According to market information, foreign private equity bigwigs such as Warburg Pincus and AIG are likely to lap up this stake. When contacted, Biocon India Chairperson, Ms Kiran Mazumdar, said that she knew nothing of the deal.

"I only know that ICICI wants to divest its stake and make some money on its investment,'' she told Business Line.

ICICI would likely make 3-4 times its investment in the company if it chose to exit now, said a venture capital source.

The deal comes as a surprise to the venture capital industry, considering that Biocon is planning an IPO in the second half of the current year.

ICICI had invested in Biocon as well as its wholly-owned subsidiary Syngene a year-and-a-half back. This was a very short investment period from a VC perspective, said sources. However, ICICI is also said to be looking to divest from Biocon for the last six months.

One explanation is that ICICI Ventures was facing a liquidity crunch, and perhaps, needed the money to pump into its new Rs 1,200-crore fund. Industry sources said that ICICI might have wanted to hawk some success stories to its prospective and new investors.

Moreover, given the dismal equity market conditions, the venture capitalists might not be able to exercise a premium exit option, market sources noted.

Biocon is the first Indian biotech firm to seek venture funding to expand operations.

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