Mumbai: The initial public offer (IPO) of Syngene International Ltd, a research arm of Biocon Ltd, to raise up to R550 crore, was subscribed nearly 32 times on the final day of the offer on Wednesday, leading to expectations of a strong appetite for such issues in the days to come.

At 6.30pm, the IPO had received bids for 511.2 million shares against the total issue size of 16 million shares, National Stock Exchange data showed.

“Syngene’s unique business model, was the key attraction to investors. This led to huge oversubscription., and it may lead to listing gains," said Dipen Shah, head of private client group research at Kotak Securities Ltd.

Syngene has raised about 150 crore from anchor investors. Biocon has fixed the price band for Syngene IPO at R240-250 per equity share.

The IPO, the first by a pharmaceutical company in five years, opened for subscription on Monday.

“There are many IPOs lined up. The success of Syngene will give more confidence to these IPO enthusiasts. Market will look at each issue depending on the business and pricing offered on the table. We think more and more companies will now come in to raise money, and IPO market is set to revive," said Shah of Kotak.

BSE expects 40 IPOs on its main platform and around 100 on the small and medium-sized enterprises (SME) platform this fiscal, indicating a strong revival of the primary markets that has remained parched since the 2010 market boom, a PTI report said on 5 July.

Some of the prominent IPOs lined to tap the capital market include InterGlobe Aviation Ltd (Indigo Airlines), Coffee Day Enterprises Ltd (Café Coffee Day) and Matrix Cellular (International) Services Ltd.

Unique business

A contract research organization (CRO), Syngene has played a key role in boosting Biocon’s revenue and profitability in the past few years, especially when growth in the biopharmaceutical business remained flat.

Syngene’s revenue rose 31.5% to 234 crore in the quarter ended June, accounting for a little less than a third of the biotechnology firm’s total revenue.

“As an experienced CRO, Syngene is well positioned to capitalize on the advantages of its flexible business models that customizes to their client’s requirements globally," Anand Rathi Financial Services Ltd said in a note on 22 July.

“We are positive on the business model of Syngene from the long term perspective and thus recommend ‘Long term subscribe’ to the issue," the brokerage had added.

Post-offer, the stake of the promoter and the promoter group will come down to 74.5% from the present 85.5%.

Silver Leaf Oak, an investment vehicle advised by India Value Fund Advisors, holds a 10% stake in Syngene, which it acquired in September 2014, at a valuation of 3,800 crore.

Axis Capital Ltd, Credit Suisse Securities (India) Pvt. Ltd and Jefferies India Pvt. Ltd are the book-running lead managers to the issue.

On Wednesday, parent Biocon’s shares closed 1.21% higher at 456.05 a piece on the BSE, while the benchmark index, the 30-share Sensex, closed 0.38% higher at 27,563.43 points.

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