Tuesday, July 24, 2012

Claris Bought by Signet Healthcare

Aditya S Handa, Director,
Claris Lifesciences Ltd.
By A Vidya, Staff Reporter:
01:06 AM IST, Tuesday, 24th July 2012:

Claris Lifesciences Ltd (BSE: 533288) counter in BSE on Monday saw a significant buy of 14.05 lakh shares by an American private equity firm, Signet Healthcare Partners.

The day was also witness to an even larger sell of 17.33 lakh shares by Aditya Sushilkumar Handa, belonging to the promoter group of Claris Lifesciences.

The deals were disclosed at Bombay Stock Exchange after trading closed on Monday.

Signet Healthcare Partners QP Partnership III LP was the specific buying fund. New York based Signet Healthcare Partners is a division of The Edelman Financial Group (formerly SMH Group), and specializes in providing growth capital to commercial stage healthcare companies around the world.

The Edelman Group (NASDAQ: EF) is an American diversified financial services player with multiple companies in its three core divisions of wealth advisors, asset management, and institutional services.

StockExplain News had earlier reported on a similar set of deals in Claris Lifesciences during the second half of April, in which the same promoter group entity had sold 11 lakh shares, with the noted FII, IHAG Privatbank Zurich AG buying 11 lakh shares.

Those deals had happened at Rs. 177 a share, and the Claris stock had rallied till Rs. 192 twice after that, where it met significant resistance and moved down.

Monday’s sell by Handa, who is a Director as well as promoter of this Indian healthcare company, was at a lower level of Rs. 162.05 a share, which makes Signet’s buy a slightly better bet.

Though promoters selling their stakes continually doesn’t bode well for any Indian company or its stock, a couple of factors may balance this out now in Claris, if not prove as a positive cue especially in the long term.

Firstly, Signet is a pharma focused family of funds, which has several current and realized healthcare companies in its portfolio. Though Indian healthcare companies are not prominently visible in its portfolio, Signet is likely to have a better than average expertise in picking an Indian pharma stock too.

The stake bought by Signet is also relatively high, as 14.05 lakh shares amounts to a significant 2.20% stake in this leading sterile injectables player with a global footprint. 

The buy is also not at a safe level, like near Claris Lifescience’s quarterly lows in the current trading range, and as such, speaks of a certain level of buying conviction. The PE fund has pumped in Rs. 22.77 crore on Monday to pick up the stake.

Promoter stake as of June end was at 67.28%, which despite being down from previous quarter’s 69%, was still relatively high by Indian standards.

The repeated promoter sells might also be a personal initiative of Aditya S Handa to raise funds, as he is more focused on other promoter group companies like Abellon CleanEnergy, Redbricks Education etc. His brother Arjun S Handa is the main promoter and Managing Director of Claris Lifesciences.

Participation by reputed institutions is all the more needed for Claris, as an earlier listed pharma firm by the same promoter group had run into several governance and financial issues, causing serious damage to investors. 

Claris Lifesciences is now audited by Deloitte Haskins & Sells.

Major non-promoter investors in the counter are First Carlyle Ventures III, Tree Line Asia Master Fund (Singapore), Max New York Life Insurance Company, Privatbank IHAG Zurich AG, Copthall Mauritius Investment, and noted academician turned celebrity investor Shivanand Shankar Mankekar.

The stock which had a reasonable Return on Equity of 15.47% in 2010, showed an erosion in RoE to 12% in 2011, largely due to one of its facilities in India going in for a USFDA re-audit that affected its US sales.

An approval from US FDA, as well as a good set of numbers for the quarter ending June, will be needed as further sustained triggers for the stock.

On Monday, Claris Lifesciences stock closed trade in BSE at Rs. 178.50, up by 2.06%, whereas BSE Sensex closed sharply down by 1.64%.