SEBI Approves Fosun-owned Gland Pharma To Launch Rs 6000 crore IPO

SEBI nods its approval to Fosun-owned Gland Pharma to make market debut with Rs 6000 crores IPO. The company filed the draft red herring prospectus (DRHP) with the market regulator in July has received the final approval. It’s going to be the first Chinese company to list in Indian bourses.

Gland Pharma is backed by a Chinese firm, Fosun Pharma. In 2017, Singapore-based Chinese pharmaceutical company obtained 74 percent stake in Gland Pharma. The other promoters are Gland Celsus, Empower Trust, and Nilay Trust.

Gland Pharma is involved in producing complex injectables, with clientele spread over 67 countries.  

SEBI’S approval for Gland Pharma IPO came at a time when the bilateral relationship between the two countries has hit the rock-bottom, following the border tension in June. As a fallout, India, on several occasions, has stifled capital flow from China. However, Gland Pharma IPO  aspiration is likely to remain unaffected by the tension. In fact, given the tailwind that Indian pharma companies have received since the COVID-19 outbreak, it wouldn’t be wrong to assume that Glad Pharma will see strong interest from investors.   

Gland Pharma IPO is likely to float next month, around the Diwali time. Let’s look at the key points associated with the offer. 

Key Highlights Of Gland Pharma IPO

• Gland Pharma is looking for a fresh investment of Rs 6000 crores, which it said will use towards meeting capital expenditure and working capital requirement 
• The offer will be a mixture of primary and secondary issues, containing fresh equities and offer for sale shares worth Rs 4,750 crores 
• Gland Pharma to raise Rs 1,250 crores in fresh capital, and the rest will come from the sale of 34 million offer for sale scrips
• Majority stakeholder Fosun Pharma has pledged to offload 12.5 percent stakes in the company 
• Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Haitong Securities India Pvt. Ltd and Nomura Financial Advisory and Securities (India) Pvt. Ltd will be the leading book managers for the IPO

Several companies have issued IPOs in the last few months, but none were a pharma company.  Eris Lifesciences was the last pharma company to list in the bourses, but that was three years ago. However, seeing the recent surge in demand for the pharma stocks, experts are hoping that Gland Pharma IPO will see a healthy appetite from investors. 

Robust financial over the years is one of the strong points to attract investors to Gland Pharma IPO. In FY 2019-20, the company clocked a revenue of Rs 2,772.4 crores and hit a profit target of Rs 772.8 crores against Rs 451.8 crore in 2018.  

Conclusion

The initial market review suggests a strong valuation for Gland Pharma IPOs.  Currently, the Indian pharma stocks are sailing in the strong wind of COVID-19, and the pharma stocks are rallying. 

The IPO is likely to launch in November, but there is no confirmation from the company yet. Typically, a company has one year to launch its initial public offer after receiving approval from SEBI.