State-backed pharma investment company Malin is to begin a “significant return” of capital to shareholders by the end of the year.
he company announced Friday that it would distribute a majority of its €118m in cash to investors via a tender offer after assessing its strategic opportunities and business needs.
The news came as Malin announced the completion of the sale of Altan Pharma, a drug developer in which the company owned a 65pc stake, to Ethypharm. Malin will receive €68.1m from the deal after paying off Altan’s debt and the costs of the transaction.
The proposed cash distribution will provide a windfall of likely more than €10m for the State through the Ireland Strategic Investment Fund (ISIF).
ISIF, the State’s sovereign wealth fund, is the third-largest investor in Malin with an 11.07pc stake after backing the company with a €50m investment in a €330m initial public offering (IPO) in 2015.
The confirmation of a major shareholder payout this year makes good on a promise Malin CEO Darragh Lyons made to investors in December 2020 to start distributing cash to investors in 2021.
In a letter to shareholders at the end of last year, Mr Lyons pledged to start monetising its pharma holdings to raise “significant cash”.
The company began that process in February with the disposal of Khymab, another of its portfolio companies, in a sale that provided $112m (€94m) in upfront proceeds with the possibility of $33m more to come if certain conditions are met.
About half of the upfront cash proceeds from the Khymab deal were used to repay an outstanding €45m debt to the European Investment Bank and fund a share buyback, while the balance was set aside to pay for this year’s capital returns to shareholders.
A Nasdaq IPO by Malin investee company Immunocore, also in February, raised gross proceeds of $268m alongside a smaller private placement, but Malin did not liquidate its 7pc stake, which was worth $51m at the time.
Malin said on Friday that it had begun “work on the preparatory steps” to initiate a tender offer.
The company said details of the offer will be announced when it publishes the notice of its next general meeting, which is planned to take place before the end of 2021.
The tender offer will be conditional on the approval of shareholders at that meeting. The terms are yet to be decided and will depend on the company’s evaluation of other cash needs, but Malin has said most of its available cash will be returned to shareholders.
A tender offer involves the company offering to buy shares from every investor for a certain price at a particular time, and usually involves a premium over the current share price to incentivise shareholders to sell.
Malin retains investment stakes in six portfolio companies apart from Altan.
At its interim results in August, Malin said it had an intrinsic equity value of €8.83 per share, down from €9.24 at the end of June.
Malin shares closed up 2.9pc at €7.00 on Friday.
The company bought back over 1.5 million shares at a weighted average price of €6.34 per share between its AGM in July and August 25.