The initial public offer (IPO) of Akums Drugs and Pharmaceuticals, is expected to see participation in anchor book allocation, by marquee names like SBI Mutual Fund, Capital Group, Franklin Templeton Investments, HDFC Life Insurance, and ICICI Prudential Life Insurance among others, said sources familiar with the development to Moneycontrol.
Akums Drugs and Pharmaceuticals, which is the country's largest contract manufacturing pharmaceutical company, is set to open for subscription on July 30 with the company aiming to raise around Rs 1,856 crore.
Here are the key things to know about the IPO:
The IPO price band has been set in the range of Rs 646 to Rs 679 per equity share of face value Rs 2.
Bids can be made for a minimum of 22 equity shares and in multiples of 22 equity shares thereafter.
The IPO is a combination of a fresh issuance of shares worth Rs 680 crore and an offer-for-sale (OFS) of 1.73 crore equity shares by existing shareholders.
The offer has a 75 percent reservation for qualified institutional buyers (QIBs) with 10 percent for retail and the balance 15 percent for high net worth individuals.
Why is the company going public and how would the proceeds be used?
Promoters Sanjeev Jain and Sandeep Jain will be selling 15.12 lakh equity shares each in the offer for sale, while investor Ruby QC Investment Holdings Pte Ltd will be offloading 1.43 crore shares. Ruby QC is backed by Quadria Capital, a prominent healthcare-focused private equity fund in Asia.
The IPO is intended to provide an exit for private equity investors and to repay Rs 387 crore worth of borrowing of the group and its subsidiaries - Pure and Cure Healthcare and Maxcure Nutravedics. The company has total borrowings of Rs 491 crore.
In 2019, Quadria Capital had invested $70 million in Akums for a 15.09% equity stake and is expected to exit through the IPO at a significant increase in valuation.
IPO proceeds worth Rs 55 crore will also be used for the company's working capital requirements and inorganic growth projects.
What does the company do?
Akums operates 10 manufacturing units for the contract development and manufacturing organization (CDMO) business, with a cumulative formulation manufacturing capacity of 49.23 billion units annually in FY24. Its new injectable facility is expected to be operational in the current fiscal year 2025.
What is the market share of the company?
According to Akums' DRHP, the company ranks as one of the largest CDMOs among those focused on the domestic market, with a revenue-based market share of 9.3 percent by value and 8.8 percent by volume in the Indian pharmaceutical market (IPM) for FY23.
In FY24, Akums' market share by value rose to 10.0 percent, while the volume share remained nearly unchanged at 8.7 percent. The Indian domestic CDMO market is expected to grow at a CAGR of 14.3 percent between FY24 and FY28, nearly doubling its historical growth rate. The market size of the Indian domestic CDMO market is forecasted to grow to $2.8 billion by FY28.
How is the shareholding spread among different investors and promoters?
Promoters hold an 82.44 percent stake in the pharma company, with 14.65 percent of shares held by Ruby QC Investment, and the remaining 2.91 percent of shares owned by employee trusts.
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How has been the financial performance of the company?
Akums Drugs and Pharmaceuticals’ revenue grew nearly 14 percent to Rs 4,212.21 crore in FY24 compared to Rs 3,700.93 crore in FY23. However, the company’s profit-after-tax declined nearly 99.1 percent to Rs 79 lakh in FY24 compared to Rs 97.82 crore in FY23.
Who are the key clients of the company?
As of September 30, 2023, key clients for the company’s CDMO business include Alembic Pharmaceuticals, Alkem Laboratories, Cipla, Dabur India, Dr. Reddy’s Laboratories, Hetero Healthcare, Ipca Laboratories, Mankind Pharma, MedPlus Health Services, Micro Labs, Mylan Pharmaceuticals, Natco Pharma, Sun Pharmaceutical Industries, and Amishi Consumer Technologies (The Mom’s Co) among others.
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