Aig Picks Up 13% Stake In Ciba Firm

The shareholding pattern of Ciba CKD Biochem has undergone a significant change with US-based American International Group (AIG), a leading insurance outfit, picking up a 13 per cent stake in it.

Simultaneously, Ciba-Geigy of Switzerland, which had a 9.8 per cent stake in Ciba CKD, has divested its entire stake in it.

Ciba CKD was jointly promoted by Hindustan Ciba Geigy, Ciba Geigy and Chong Kun Dang Corporation of South Korea their respective shareholding being 41.2 per cent, 9.8 per cent and 49 per cent. Following the changed equity structure of Ciba CKD, Hindustan Ciba-Geigys share will come down to 21 per cent, Chong Kun Dangs share will decline to 25 per cent and AIG will have a 13 per cent share. Employees of Hindustan Ciba-Geigy and Ciba CKD will have 7.5 per cent share and 28.5 per cent will be held by the public.

Sources said the change in the shareholding pattern took place following the companys decision to raise resources through private placement of shares, a preferential issue and a public issue.

The resources are required to part-finance Ciba CKDs Rs 110-crore rifampicin and cephalos porin derivatives project. The processwas initiated some weeks ago with a preferential issue of shares, equivalent to 10 per cent of the companys equity, to employees of Hind Ciba-Geigy and Ciba CKD.

Only 7.5 per cent of the preferential offer, however, was picked up. Consequently, the companys management decided to increase the public issue size, which will now go up from 26 per cent as planned earlier to 28.5 per cent of the equity.

The timing of the public issue has not yet been finalised, although it is expected to hit the market before March 1997. The actual timing of the public issue will be dictated by market conditions, said S G Advani, managing director of Ciba CKD.

Last Saturday, AIGs subsidiary Keenan Ltd invested Rs 16.12 crore in the privately placed shares of Ciba CKD.

The placement was organised by UTI Securities Exchange Ltd, which is a leading investment banking and corporate broking company.

American International Group is one of the largest underwriters of commercial and industrial coverages in the US.

Its member companies write marine, property, casualty, life and financial services insurances and are engaged in a range of financial services businesses.

Ajay Lal, AIGs director of direct investments, India, said We have come to India with a long-term perspective and are, therefore, making direct investments rather than portfolio investments.

American International Group has set up a $ 150 million corpus, the `Indian Sectoral Equity Fund, in association with Infrastructure Leasing & Financial Services (ILFS) to invest in infrastructure-related areas in India.

He said the $ 1.06 billion AIG Infrastructure Fund has made several direct investments in India, including Modicom, Tata Bell Canada and Ballagarh Power.

Citing professional management and Cibas reputation in the drug industry as the reasons behind AIGs first investment in a pharmaceutical company in India, Lal said We are glad to be associated with an important project of Hindustan Ciba-Geigy.

Ciba CKD Biochem has already invested Rs 77 crore in its 125 tonnes per annum (TPA) plant to make rifampicin and cephalosporin derivatives.

The plant is expected to go on-stream by the first quarter of 97 with a 75 per cent capacity utilisation in the first year of operations.

The entire rifampicin production will be sold to Hind Ciba.

Government sources said the current demand for rifampicin is 312 TPA and is growing at a compounded rate of 10 per cent.