Biocon board to weigh BBL stake buyout, fundraising options on December 6

Biocon's board will meet on December 6 to consider acquiring Biocon Biologics shares from minority investors through cash or a share swap, and to approve fundraising options such as QIP, rights issue

The board of directors of Biocon Limited is set to meet on Saturday to consider two pivotal proposals that could reshape the firm’s corporate structure and global growth strategy. The core agenda focuses on consolidating control of its biosimilars arm  and securing long-term capital for expansion. 

The two main proposals for the Biocon Board meeting represent a major strategic pivot — the first proposal is a strategic investment in Biocon Biologics Limited (BBL), its unlisted subsidiary. 

Biocon plans to buy shares from BBL’s current shareholders, paying either cash or by issuing them new Biocon equity shares in a preferential allotment. 

The second proposal concerns a fundraising plan. 

The company seeks approval to raise capital by issuing commercial paper or equity securities through various market methods, such as a QIP (Qualified Institutions Placement), Rights Issue, or FPO (Further Public Offer). 

Both proposals are subject to the necessary regulatory and shareholder approvals. Biocon shares were down 5.3 percent on BSE on Thursday. 

Increasing stake in Biocon Biologics 

The most significant proposal on the agenda for the upcoming Biocon Board meeting is a strategic move to consolidate control over its high-growth biosimilars business. 

The BBL’s parent company is seeking to substantially increase its ownership stake in the unlisted subsidiary by acquiring securities from existing BBL shareholders (which include minority investors such as the Serum Institute of Life Sciences, True North, and Tata Capital). 

This transaction is planned to be executed using either cash payment or a share swap mechanism, where BBL shareholders would receive fully paid-up Biocon equity shares on a preferential basis, effectively merging the ownership of the key subsidiary back into the main listed entity. 

This move is being reviewed in the context of an internal valuation of Biocon Biologics at approximately $4.5 billion. 

The consideration for the acquisition could be structured through cash payment and/or the issuance of fully paid-up Biocon equity shares on a preferential allotment basis (a ‘share swap’). 

This proposal is widely seen as an alternative route to unlock shareholder value, especially after plans for a direct BBL initial public offering (IPO) were complicated by market volatility and the $1.2 billion in acquisition-related debt incurred from the Viatris deal.

 

Consolidating BBL with the parent entity would simplify the corporate structure, improve transparency for public investors, and allow the market to value the high-growth biosimilars business within a single, listed entity.

 

Securing financial runway

 

The second proposal is a broad plan for the company to raise capital to ensure it has the necessary financial muscle for the future. The Board could approve plans to raise funds using instruments like commercial paper or equity shares, through various market methods such as a QIP, Rights Issue, or FPO (Further Public Offer) in one or more tranches, subject to required approvals including shareholder approval at an Extra-Ordinary General Meeting.

 

This capital is vital for strengthening the company’s balance sheet, managing debt from past acquisitions, and funding major expansion in R&D and manufacturing, especially for promising new drug areas like its GLP-1 peptide pipeline for diabetes and obesity treatment.

 

In essence, the December 6th Board meeting is tasked with approving the foundational steps toward a comprehensive strategic overhaul, where the decision to acquire full control of BBL and securing significant financial runway will determine Biocon’s trajectory in the competitive global biosimilars market.