Poonawallas turned down private equity firms’ $ 1 billion offer
Serum Institute of India (SII) was on the verge of signing a billion dollar deal with a handful of top global investors last year, but pulled out at the last minute even as it struggled to increase production of Covid-19 vaccines due to an apparent lack of funds, said two people directly aware of the matter.
The family-owned Poonawalla turned down an offer from a consortium of private equity firm TPG Capital, ADQ Abu Dhabi and the Saudi Arabia Public Investment Fund (PIF) due to differences in funding. evaluation, a few days before the October deadline of last year.
According to the people cited above, the decision not to raise funds was also aided by an influx of funds into the company from the Bill and Melinda Gates Foundation, which provided the vaccine maker with $ 300 million. to fund vaccine doses for low- and middle-income countries.
“The Poonawalla family were looking for a valuation of $ 10 billion for a newly formed subsidiary in which the business interests of all upcoming IBS vaccines, including Covid vaccines, were to be housed. SII has partnered with five international pharmaceutical companies, including AstraZeneca and Novavax, to develop a Covid vaccine and has pledged to produce 1 billion doses, half of which it has pledged to India. However, the Poonawallas changed their minds and refused the equity injection, ”said one of the two people named above.
“The main reason was clearly the valuation, as the family expected an even higher valuation given the margins they were supposed to generate from vaccine sales,” the person added.
“It appears the family has developed last minute concerns about the divestiture,” said the second person, adding that “this is not the first time the family has engaged with investors, however. ultimately decided not to divest.
“In 2015, SII held several rounds of negotiations but decided not to sell any stake.”
“Looking back, no one anticipated the severity of the second wave of Covid-19 infections that we are witnessing now, and it seems the promoters of IBS have missed the emergency too much,” the second person said. .
However, in April, Adar Poonawalla said that SII needed ₹3,000 crore ($ 408 million) from the government to increase its “very stretched” production capacity.
Requests for comment to Adar Poonawalla, TPG Capital and ADQ went unanswered until press time on Tuesday.
A spokesperson for the PIF declined to comment.
In a recent interview with the Financial Times, Poonawalla, currently in London, warned that vaccine shortages would continue until July, when production is expected to drop from 6 to 7 crore per month to 10 crore. Poonawalla said authorities did not expect to face a second wave in January when new cases of the coronavirus declined.
“Everyone really felt that India had started to turn the tide on the Covid-19 pandemic,” he said.