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Macleods Pharmaceuticals defers big-bang listing plans; will PE funds step in now?

Moneycontrol was the first to report the listing plans of Macleods Pharma on July 25, 2021. According to its DRHP, the firm’s proposed IPO consists purely of an OFS from the promoter group comprising 60.5 million shares and the size was expected to be around Rs 5,000 crore.

September 13, 2022 / 08:38 PM IST
Representative image

Representative image

Mumbai-based drugmaker Macleods Pharmaceuticals has deferred the launch of its big-bang initial public offer (IPO) which was slated to be one of the biggest ever in the pharma sector, multiple industry sources with knowledge of the matter told Moneycontrol.

The move by Macleods Pharmaceuticals, following a valuation mismatch post discussions with investors, reflects the challenging stock market environment, especially for large-sized IPOs even as smaller issues have hit Dalal Street in recent weeks following a lull in IPO activity between May and mid–August.

According to its DRHP (draft red herring prospectus ), Macleods Pharma’s proposed IPO consists purely of an OFS or offer for sale from the promoter group comprising 60.5 million shares and the size was expected to be around Rs 5,000 crore.

“Macleods Pharmaceuticals has put its IPO plans on hold for a few months. At the time of filing the papers with market regulator Sebi in February, the firm was targeting a valuation of Rs 50,000 crore. They had secured the regulatory nod but fell sharply below the desired valuation levels and will not move ahead for now after initially weighing a potential deal launch in August & September,” said one of the persons above.

Two other persons also confirmed the deferral of the IPO.

A fourth person told Moneycontrol that having pressed the pause button on the listing plans, Macleods Pharma had held preliminary discussions with a clutch of private equity funds, including pharma-focused ChrysCapital, to evaluate the sale of a minority stake and raise around $100 million via a private round instead.

This person was quick to add that no final call had been taken as yet by the promoter group on whether to go down the PE fund raise route or not.

“Macleods Pharma is a cash-rich, zero debt firm and has a solid domestic business. There are very few pharma assets of this size and scale. Hence, the interest from private equity funds is not surprising, though it’s unclear if the firm will opt for fundraising at this stage,” a fifth person added.

The validity of the DRHP ( draft red herring prospectus) is till May 2023 and the firm had sufficient time to wait for a better market environment and launch the IPO later, this fifth person added.

All five persons above spoke to Moneycontrol on the condition of anonymity.

A detailed email query sent to Macleods Pharma and ChrysCapital remained unanswered at the time of going to press.

Moneycontrol was the first to report the listing plans of Macleods Pharma on July 25, 2021.

The Rs 6,480-crore IPO of Gland Pharma, which was launched in November 2020, holds the record for the biggest-ever offering in the domestic pharma segment. In August 2021, Bain Capital-backed Emcure Pharma had filed papers with the regulator for a proposed Rs 4,500 crore – Rs 5,000 crore IPO.

The DRHP of Macleods Pharma, which specialises in the development and manufacture of APIs (active pharmaceutical ingredients) and finished dosage pharmaceutical formulations, says the objectives of the offer are to –

a) achieve the benefits of listing the equity shares on the stock exchanges
b) carry out the offer for sale of up to 60,482,040 equity shares by the selling shareholders.

“Further, our company expects that the proposed listing of its equity shares will enhance our visibility and brand image as well as provide a public market for the equity shares in India. Our company will not receive any proceeds from the offer," the DRHP said.

Kotak Mahindra Capital, Nomura, ICICI Securities, Edelweiss Financial Services and Citi are the investment banks working on the IPO.

On August 20, API Holdings, the parent entity of PharmEasy announced the withdrawal of the draft red herring prospectus (DRHP) submitted for an initial public offering (IPO). The pre-IPO draft papers, which were filed on November 9 last year were withdrawn due to "market conditions and strategic considerations", the company, which is now mulling a rights issue instead, said in a notice.


Dr Rajendra Agarwal along with his brothers Girdhari Lal Bawri and Bandwari Lal Bawri started Macleods Pharmaceuticals in 1989 with an aim to produce anti–TB medicines.

As of February, the firm was the seventh largest in the Indian pharmaceuticals market based on its domestic sales. It is engaged in developing, manufacturing, and marketing a wide range of formulations across several major therapeutic areas including anti-infectives, cardiovascular, anti-diabetic, dermatology, and hormone treatment. For the year ended March 2021, it clocked Rs 7,199 crore in revenues from operations with an Ebitda of 2,096 crore.

The domestic business comprises branded generics, and revenue from operations in India represented 51.73 percent of the total revenue from operations in Fiscal 2021, which was the 3rd highest proportion of domestic business among nine other key pharmaceutical companies in India.

The DRHP says the firm has the highest number of WHO pre-qualified products globally with 65 registrations, and the highest number of WHO pre-qualified anti-TB product registrations with 32 registrations, as of December 31, 2021.

Its eight manufacturing units produce a range of oral dosage forms and complex formulations such as topicals, injectables and inhalers, and have obtained approvals from various regulatory bodies, including the USFDA, the U.K. Medicines and Healthcare products Regulatory Agency (the “MHRA”), the European Directorate for the Quality of Medicines (the “EDQM”) and SAHPRA.

The firm also manufactures its own APIs primarily for products that it distributes outside India. Macleods Pharma has a global presence in more than 170 countries across developed and emerging markets such as North America, Europe, Africa, Asia, South America, and the Commonwealth of Independent States (the “CIS”).

Ashwin Mohan
first published: Sep 13, 2022 07:25 pm