NEWS OF THE W EEK
EVONIK READIES AN IPO AGAIN FINANCE: Shares of the company
are set to trade on the Frankfurt exchange by the end of June
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OR THE THIRD TIME since 2008, owners of
Evonik Industries are planning to sell shares of the German specialty chemical maker in an initial public offering on the Frankfurt Stock Exchange, this time by the end of June. Owners RAG Foundation and private equity firm CVC Capital Partners have not stated publicly what percentage of the firm they will sell or how much money they intend to raise. Reports from Germany indicate that the two owners plan to sell a 25% stake in Evonik that could raise as much as $5.6 billion. RAG, which owns 75% of Evonik, will offer two-thirds of the shares to be sold, and CVC, which owns 25%, will offer the rest. EVONIK
Evonik’s headquarters in Essen, Germany.
LILLY HELPS BOOST BIOTECH IN CANADA VENTURE FUNDS: Drug firm joins others in supporting the country’s life sciences sector
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cal maker to back early-stage life sciences firms in Canada. Last week, the drug company, Teralys Capital, and other partners invested in a $150 million venture fund managed by TVM Capital in Montreal. The fund intends to support small firms focused on single therapeutic projects. To provide further assistance, Lilly will also establish a Canadian division of Chorus, the early-phase drug development network it started in 2002. Drawing on Lilly and outside service providers, Chorus will help small Quebec-based companies advance drug candidates to the clinical proof-of-concept stage. A majority of Canada’s life sciences firms are in Quebec, according to the economicdevelopmentgroupInvestissement Québec. Thanks to tax incentives GSK
A researcher at GlaxoSmithKline’s Laval, Quebec, R&D site.
LI LILLY & CO. is the latest global pharmaceuti-
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“Despite the challenging conditions on the financial markets, we are entering the intensive phase of preparations for the planned stock exchange listing with great confidence,” says Evonik Chairman Klaus Engel. Still, RAG warned that it could postpone plans again should market conditions change. The firm consists largely of the old Degussa hydrogen peroxide, acrylics, and specialty chemical operations. In 2011, it had sales of $20.2 billion, up 9% from the previous year. Operating earnings rose 17% to $3.9 billion. Among German chemical companies, only BASF and Bayer are larger than Evonik. RAG originally intended to sell Evonik shares to the public in 2008. It nixed those plans because of the financial crisis and instead sold a 25% stake to CVC for $3.7 billion. RAG again arranged to sell shares to the public last year, but it shelved plans in October because of market uncertainties. Proceeds from RAG’s offering are earmarked for pensions owed to workers and costs related to RAG’s coal mines, which are largely shut down. The credit-rating agency Standard & Poor’s gave Evonik a good bill of health last month when it increased its rating of the firm’s long-term debt to an investment grade of BBB+. In a report to investors, S&P analysts note the firm’s “higher profitability and reduced exposure to cyclical end markets compared with most of its specialty chemical peers.”—MARC REISCH
and a skilled workforce, Montreal ranks eighth among cities in North America for pharma jobs, the group says. Merck & Co. targeted Quebec in March when it invested $35 million in the Merck Lumira Biosciences Fund. The $50 million investment fund includes partners Lumira Capital and Teralys and focuses on life sciences innovation in the province. In addition, Teralys and Merck contributed to a $100 million Lumira fund supporting later-stage efforts in Canada and the U.S. For its part, Merck was fulfilling investment promises made in 2010 when it decided to close its Montreal site. GlaxoSmithKline is also investing in Canada through the GSK Canada Life Sciences Innovation Fund, which it created late last year. Besides supporting start-up companies, the $50 million fund looks to invest in academia, health institutions, and translational research centers. Last week, GSK and the nonprofit Centre for Drug Research & Development in Vancouver, British Columbia, set up the GSK-CDRD Innovation Fund to support early-stage CDRD projects. And with CDRD’s for-profit venture arm, GSK has established a second fund to help move projects toward commercialization. The big pharma money will be welcome across Canada, where life sciences investment has yet to recover fully from the recession. In 2011, venture capital spending on life sciences totaled $333 million, which was 63% above the 2009 low but still down 45% from the record 2007 level, according to Canada’s Venture Capital & Private Equity Association.—ANN THAYER
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