Concord Biotech, backed by Rakesh Jhunjhunwala's firm, targets August IPO launch at up to $1 bn valuation

Ahmedabad-based top biotechnology firm Concord Biotech, which is backed by the late veteran investor Rakesh Jhunjhunwala's firm Rare Enterprises and private equity firm Quadria Capital, is gearing up to launch its IPO (initial public offer) in early August, multiple industry sources with knowledge of the matter told Moneycontrol.

"The UDRHP (updated DRHP) was filed with the Securities and Exchange Board of India (SEBI) a few days back and as things stand, the Concord Biotech issue is likely to be launched in the first or second week of next month. The firm is targeting a valuation between $950 mn and $1 bn," one of the persons cited above told Moneycontrol.

Two other persons confirmed the proposed timing of the launch of the issue.

According to a fourth person, the size of the IPO is likely to be around Rs 1,500 crore to Rs 1,600 crore, and it will consist entirely of an offer for sale (OFS).

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

Moneycontrol is awaiting an email response from Concord Biotech and has sent multiple reminders. Quadria Capital could not be reached for an immediate comment. This article will be updated as soon as we hear from both the firms.

Concord Biotech filed draft papers with SEBI in August 2022 and got the regulator's nod in December.

Also Read: Rakesh Jhunjhunwala-backed Concord Biotech files draft papers to float IPO

As mentioned earlier, the issue is a pure offer-for-sale of up to 20.93 million shares or the entire 20 percent stake by Helix Investment Holdings Pte Ltd, which is backed by Quadria Capital Fund LP, a healthcare-focused private equity fund in Asia.

According to the draft papers, Quadria Capital had invested Rs 475.30 crore in 2016 for a 20 percent stake in Concord.

Legendary stock investor Rakesh Jhunjhunwalal, who passed away last year, held over 24 percent stake in the active pharmaceutical ingredients (API) maker through his asset management arm Rare Enterprises. Utpal Sheth is the CEO of Rare Enterprises.

Kotak Mahindra Capital, Jefferies and Citi are the investment banks working on the deal as per regulatory filings. Cyril Amarchand Mangaldas, Indus Law and Khaitan & Co are the legal advisors to the company, the i-bankers and the selling shareholders respectively.

A CLOSER LOOK AT CONCORD BIOTECH AND THE MARKET

According to the draft papers of Concord Biotech, it is "one of the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on volume in 2021. The firm had (i) 22 APIs across immunosuppressants, oncology and anti-infectives, and (ii) 43 formulations across immunosuppressants, nephrology drugs, anti-infectives for critical care and other therapeutic areas."

The firm, which is promoted by Sudhir Vaid and Ankur Vaid, had over 200 customers in over 70 countries as of March 31, 2022 for APIs and formulations, the DRHP added.

For the financial years 2020, 2021 and 2022, its total revenue from operations was Rs 512.32 crore, Rs 616.94 crore and Rs 712.93 crore, respectively, representing a CAGR of 17.96 percent. For the financial years 2020, 2021 and 2022, its profit for the year was Rs 169.11 crore, Rs 234.88 crore and Rs 174.92 crore.

Additionally, for the financial years 2020, 2021 and 2022, the EBITDA margin, defined as EBITDA divided by revenue from operations, was 39.8 percent, 53.02 percent and 37.82 percent respectively.

The global small-molecule fermentation-based API market is expected to reach $13 billion in 2026 at a CAGR of 3.6 percent from 2021 to 2026. The immunosuppressant drug market is expected to grow at a CAGR of 9.6 percent from 2021 to 2026. The oncology drug market, the largest segment among the therapeutic areas in the API market, is expected to reach $67 billion by 2026.

THE QUADRIA CAPITAL PORTFOLIO

Earlier this month, Quadria Capital invested up to $155 mn in Maxivision eye hospitals which operate in southern and western India.

Quadria Capital has previously invested in other domestic pharma and healthcare firms like MediBuddy, Akums Drugs and Pharmaceuticals and Strand Life Sciences, according to their website.

On May 23, 2023, Moneycontrol reported that a raft of bulge-bracket private equity funds including PAG, BPEA EQT and the Nirma Group had expressed preliminary interest in the ongoing process to sell a majority stake in API (active pharmaceutical ingredients) developer and manufacturer Glenmark Life Sciences, a listed subsidiary of drugmaker Glenmark Pharmaceuticals.

Also Read: Race for Glenmark Life Sciences: Blackstone, KKR, BPEA EQT, PAG and Nirma Group likely suitors

Rakesh Jhunjhunwala says 4 of his investments headed for IPO; Here they are