On Wednesday, the government granted approval for Foreign Direct Investment (FDI) of up to Rs 9,589 crore in Suven Pharmaceuticals. This investment comes from Berhyanda Ltd, a Cyprus-based company, and is intended to support the expansion of capacity within the Indian pharmaceutical firm.
Following a comprehensive evaluation by regulatory bodies such as Sebi, RBI, CCI, and other relevant agencies, the decision was reached. The official release, issued after the Cabinet Committee on Economic Affairs (CCEA) meeting, stated that the approval pertains to the acquisition of up to 76.1 percent equity shares of Suven Pharmaceuticals Limited by Berhyanda Limited, Cyprus. This acquisition will be facilitated through the transfer of shares from existing promoter shareholders and public shareholders via a mandatory open offer.
As a result of this foreign capital injection, the aggregate foreign investment in Suven may increase to 90.1 percent.
The shares of Suven Pharma Ltd. were closed at Rs.557.30 apiece, a 5.40% higher than previous close on Friday.
It’s noteworthy that the entirety of the investments in Berhyanda Ltd is held by Advent Funds, which consolidates investments from various limited partners (LPs). Advent Funds are overseen by Advent International Corporation, an entity incorporated in the United States. Advent India embarked on its investment journey in India back in 2007 and has since invested approximately Rs 34,000 crore in 20 Indian companies spanning various sectors, including healthcare, financial services, industrial manufacturing, consumer goods, and IT services.
The approved investment aims to achieve several objectives, including the generation of new jobs and the expansion of the Indian company’s capacity through investments in plant and equipment. Furthermore, the association with Advent Group is expected to provide Suven with a broader platform for expanding its business operations.
It’s worth noting that under the FDI policy, 100 percent overseas investment is permitted via the automatic route for greenfield (new) pharmaceutical projects. In the case of brownfield pharmaceutical projects, FDI up to 74 percent is allowed through the automatic route, with government approval being required for investments exceeding 74 percent.