FII to pick stake in Transgene Biotek

Transgene Biotek today said it is offloading undisclosed quantum of stake in the company to a foreign institutional investor as a result of which the company's shares will be delisted from domestic stock exchanges.

Last week the company had announced that its board has decided to delist its equity shares from all the recognised Indian Stock Exchanges.

"Our announcement in the recent days has been triggered by an approach by a SEBI-registered FII to join hands with Transgene's promoters on a long term basis. This is to support company's drug discovery activity in exchange for equity participation and certain rewards on drug licensing or sale," Transgene Biotek said in a filing to BSE.

Without disclosing details such as the name of the FII or the quantum of stake to be offloaded, the company said one of the preconditions set by the investor that has approached it to support drug discovery activity was delisting.

"The investor shall join the promoter group and shall have a seat on the board, both events only, after the completion of delisting process," Transgene Biotek Managing Director KK Rao told PTI in an emailed response.

He further said the investor is backing the promoters in the delisting process for acquisition of the listed shares.

Transgene Biotek 's board has approved an exit price not lower than the floor price of Rs 25 per share.

In the event of the delisting being successful, the new management of Transgene will enjoy enhanced flexibility. It may at some point choose to increase exposure to western markets (besides Luxembourg), the company said.

As per latest data available on BSE, till the quarter ended June 2012, the promoters held 36.83% stake in the company. Out of a total public shareholding of 63.17%, FIIs held 6.99% stake.

The company further said that the lower market value of the company's stock despite progress of its product pipeline was also one of the reasons behind the proposed delisting.

The two recent animal studies on the company's oral insulin project for diabetes have yielded exceptional results that gives rise to the confidence that soon it would be in strategic partnership with a large pharma firm, it said.

"Yet we continue to see erosion in company value accompanied by perceived investor pessimism, and this has led to the approval by the board for de listing," Transgene Biotek said.

Shares of Transgene Biotek today closed at Rs 11.41 a scrip on the BSE, up a steep 4.97% from its previous close.