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FIPB Clears Fosun’s Proposal To Acquire Gland Pharma

The total size of the Fosun’s proposal is Rs 8,600 crore.

General views of drugs (Photographer: Brent Lewin/Bloomberg)
General views of drugs (Photographer: Brent Lewin/Bloomberg)

China’s Fosun Pharmaceuticals came a step closer to acquire Gland Pharma Ltd. as the Foreign Investment Promotion Board (FIPB) on Wednesday cleared its Rs 4,300-crore investment in the Indian company, a senior finance ministry official said.

The remaining Rs 4,300 crore involves acquisition cost and transfer of shares, the official told reporters without willing to be identified. The Chinese drugmaker has agreed to acquire 86.08 percent stake in Gland Pharma in a Rs 8,600-crore deal.

This foreign direct investment (FDI) proposal will now have to be cleared by the Cabinet Committee on Economic Affairs (CCEA) as its total size exceeds Rs 5,000 crore.

FIPB had deferred Fosun’s investment proposal in Gland Pharma in its last meeting on February 21 as the Indian company had failed to submit a few documents regarding the deal.

The transaction, the largest purchase of an Indian asset by a Chinese company, would allow the acquirer to gain control of a new stable of injectable medicines as well as manufacturing facilities in India, according to a Bloomberg report.

The FIPB on Wednesday also cleared nine other proposals worth Rs 200 crore, while deferring 11, including that of Vodafone Mobile Services Ltd. and Sistema Shyam Teleservices Ltd. It rejected five proposals.

India allows FDI in most sectors through the automatic route, but in certain segments that are considered sensitive for the economy and security, the proposals have to be first cleared by the FIPB. FDI investments above Rs 5,000 crore need CCEA’s approval.

The government is likely to soon move a Cabinet note to abolish FIPB. Finance Minister Arun Jaitley had said in his Budget Speech 2017-18 that the FIPB, which is an inter-ministerial body, will be phased out and a new mechanism for FDI will be introduced shortly.