China's Shanghai Fosun Pharmaceutical (Fosun Pharma) has shortlisted three merchant bankers to manage its Indian initial public offer (IPO) for Hyderabad-based injectable drugs maker Gland Pharma, sources told Moneycontrol.
If the listing plans fructify in FY20, this could arguably be the first major domestic IPO of an Indian company with a Chinese parent, sources said. Hong Kong-listed Fosun Pharma had acquired around 74 percent in Gland Pharma for around $1.09 billion in October, 2017, offering an exit to private equity firm KKR. Much of the residual stake remained with founder promoters, who continued on the company’s board after the deal.
"IPO discussions have been on since last year and recently Kotak Mahindra Capital, Citigroup Global Markets India and Haitong Securities have been picked as advisors as part of preliminary preparations. If required, additional merchant bankers will be brought on board at a later stage. As of now, the plans are to raise between $350 million and $400 million, though a final call has not been taken as yet on the issue size as these are early days," a source said.
"The proposed IPO will provide an exit route to the company’s founder promoters and Fosun is likely to divest part stake," a second source told Moneycontrol. “The company is in touch with Chinese authorities and regulators for certain approvals and permissions regarding its India IPO plans," a third source added.
Gland Pharma is a pure-play generic injectable pharmaceutical products company founded in 1978 by PVN Raju and is currently led by Vice Chairman and Managing Director Ravi Penmetsa. The company earns bulk of its revenue from the US and European markets. It had pioneered Heparin -- an anti-coagulant that is used during surgeries and in the treatment of heart attacks -- technology in India.
The company has four manufacturing facilities: three at Hyderabad and one at Visakhapatnam. Its range of injectables include vials, ampoules, pre-filled syringes, lyophilised vials, dry powders, infusions and ophthalmic solutions. Gland Pharma’s manufacturing facilities have been approved by the US Food & Drug Administration (USFDA), Medicines and Healthcare Products Regulatory Agency (UK MHRA) and other regulators and is present in more than 90 countries, its website states.
"Gland Pharma was acquired by the Group in 2017. In 2018, it benefited from the growth of major products such as vancomycin, enoxaparin injection and caspofungin and recorded a 26.62 percent year-on-year increase in revenue as compared to 2017. Net profit rose 39.92 percent YoY," said the 2018 annual report of Fosun Pharma.
Frank Yao, Co-Chairman, Fosun Pharma, told Moneycontrol on February 28 that the integration process of Gland Pharma with Fosun is over and that the company has plans to expand its manufacturing footprint and add more products to its pipeline.
2019 has been a lacklustre year so far in terms of listings. Data compiled by Prime Database till June-end shows that only eight IPOs had hit the market and raised Rs 5,509.47 crore. In contrast, 24 companies raised Rs 30,959.07 crore in 2018.
Also read: 6 companies planning to hit IPO market by mid-August: Report
Citi declined to comment to a Moneycontrol query. We are awaiting an email response from Fosun Pharma, Gland Pharma, Kotak Mahindra Capital and Haitong Securities. This article will be updated as soon as we hear from them.
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