Cabinet to decide KKR Floorline Investments’s Rs 1400 crore Gland deal today
NEW DELHI: The government is scheduled to discuss private equity firm KKR’s stake acquisition in two firms, Gland Pharma and Gland Celcus Bio Chemicals, on Tuesday, amid indications that Prime Minister Manmohan Singh is not keen on clearing investments to the tune of Rs 1,400 crore as the government’s tenure is coming to an end.
In fact, the issue did not figure on the cabinet agenda earlier despite the transactions involving KKR Floorline Investment Pvt Ltd, a PE firm from Singapore, having got a go ahead from the Foreign Investment Promotion Board as well as the Competition Commission of India.
KKR intends to invest $191 million (around Rs 1150 crore) in Gland Pharma for a 37.9% stake, while it spending another $39.8 million (Rs 240 crore) for a 24.9% in Gland Celsus Bio Chemicals. “The revised agreement submitted by KKR Floorline Investments Pvt Ltd and the specific undertaking executed by them in respect of non existence of the non-compete clause have been forwarded to the DIPP, pharma department and the health ministry,” said an official, adding that there should not be any concerns on that count. In fact, based on the approvals by FIPB, KKR has even brought in the Rs 1,400 crore into the country but is unable to invest as the requisite cabinet approval is awaited.
Pharma sector acquisitions have been a vexed issue in recent months with the health ministry and the department of industrial policy and promotion (DIPP) against overseas players buying majority stake in Indian firms, arguing that it may affect the supply of affordable drugs.
While the finance ministry and Planning Commission have been pushing for a clearance, arguing that it is “routine approval” , the Prime Minister does not want to be seen to have approved an investment proposal towards the fag end of the government’s tenure. In fact, the issue has been included on the agenda after last minute persuasion by the finance ministry, said an official , who did not wish to be identified.
