Gland Pharma gets Sebi approval for Rs 6,000-crore IPO

The Gland Pharma IPO is a mixture of primary and secondary issue of shares with both China’s Fosun group and the founders of Gland Pharma due to dilute shares. Gland Pharma may look to launch the IPO in November 2020

Gland Pharma IPO

Gland Pharma, which is majority owned by China’s Shanghai Fosun Pharmaceutical (Fosun Pharma), has received a crucial nod from market regulator Sebi to launch an initial public offering (IPO) to raise up to Rs 6,000 crore, people familiar with the matter told Moneycontrol.

If the listing plans of the Hyderabad-based injectable drug maker fructify, it would mark the first major IPO by an Indian company that has a Chinese parent.

The nod from the Securities and Exchange Board of India (Sebi) comes amid a buoyant phase of valuations in the pharma sector and frosty diplomatic ties between India and China due to military aggression in Eastern Ladakh earlier this year, leading to casualties on both sides.

A series of IPOs have been launched in recent months. but no pharma company has listed on the Indian bourses this year. The last IPO by an Indian drugmaker—Eris Lifesciences— was more than three years ago in June 2017.

On July 11, 2020, Moneycontrol was the first to report that Gland Pharma had filed its draft red herring prospectus with Sebi for the proposed IPO. Earlier, Moneycontrol was also the first to report on Gland Pharma shortlisting investment bankers as part of preliminary preparations on July 19, 2019.

“The final observations from Sebi came in earlier this week, and the company has got the nod from the regulator. An updated offer document incorporating feedback from Sebi and the latest factual position will be filed shortly. Then the RHP (red herring prospectus) will be filed with RoC,” said one of the persons cited above.

Another person with direct knowledge of the matter confirmed the same.

“Valuations are good in the pharma sector currently and Gland Pharma would like to launch the IPO as soon as possible. Based on feedback from the market and investors, the company may possibly look to launch the IPO in November, but no final call has been taken as yet,” a third person added.

After Sebi reviews the DRHP and shares its comments, Gland Pharma has a one-year window to launch the IPO.

Kotak Mahindra Capital Company Ltd, Citigroup Global Markets India Pvt Ltd, Haitong Securities India Pvt Ltd, and Nomura Financial Advisory and Securities (India) Pvt Ltd are advising the company on the IPO.

All the three individuals spoke to Moneycontrol on the condition of anonymity. Moneycontrol could not immediately connect with Fosun and Gland Pharma and is awaiting their response to an email query. This article will be updated as soon as we hear from them.

The IPO is a mixture of primary and secondary issue of shares with both Fosun group and the founders of Gland Pharma slated to dilute shares as part of the issue. Most of the IPO proceeds will be used for capex and working capital for its Indian operations. The offer is likely to comprise a fresh issue aggregating up to Rs 1,250 crore and an offer for sale of up to Rs 4,750 crore.

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