"Bain Capital has been invested in Emcure Pharma for the past six years and will get an exit via the proposed IPO," a source told Moneycontrol.
Pune-headquartered Emcure Pharma is looking to ring-fence its domestic business through a restructuring exercise as its US business is grappling with regulatory issues in that market.
Private equity major Bain Capital is a major investor in Emcure.
"The company has mandated investment bank JM Financial for demerging the domestic formulation business into a separate company and then take it public at a later date. The domestic business has a substantial chronic component and is growing at a healthy pace. If required, a pre-IPO round may also be looked at," sources told Moneycontrol.
"Bain Capital has been invested in Emcure Pharma for the past six years and will get an exit via the proposed IPO," another source added.
Bain Capital had purchased Blackstone's 13.09 percent stake for around Rs 650 crore in December 2013, according to reports. This is not the first time that Emcure Pharma is attempting a D-street debut.
It had filed draft offer documents with SEBI in June 2013 and then withdrew its Rs 500 crore offer in June 2014.
"There is a lot of appetite amongst investors for pharma companies with a substantial domestic business, as there is no volatility of earnings on account of regulatory risks linked to US FDA findings," said Satyen Shah, Head of Investment Banking, Edelweiss Financial Services.
In July 14, 2015, the US-Food and Drug Administration (USFDA) barred imports of drugs manufactured at the Hinjewadi, Pune plant of Emcure Pharmaceuticals due to violations of certain standard manufacturing process and documentation.
"The move has delayed new product launches in the US market and impacted the firm’s scale of operations and profitability. Additionally, the firm was recently issued a warning letter by USFDA which cites significant violations of current good manufacturing practice (CGMP) regulations for finished pharmaceuticals which remains in continuation with the said ongoing USFDA investigation. However, the firm continues to manufacture and export nine exempted products from the plant," according to a September 2019 report by CRISIL.
Emcure Pharma is a vertically integrated, manufactures APIs ( active pharmaceuticals) and formulations and is also involved in bio-technology drugs.
Under formulations, it has presence in the high value chronic therapy as well as in acute segments. Under chronic segment, the company's products are diversified across cardiology, oncology, nephrology, anti-HIV etc. Acute products are diversified across anti-infective, pain management, anemia, gynaecology, anti retrovirals and paediatrics.
The firm has six manufacturing facilities (five in Pune and one located at Jammu), out of which three are approved by the UK Medicines & Healthcare Products Regulatory Agency (MHRA, UK), Geneva WHO, South African Medicine Control Council (MCC) and ANVISA, Brazil while four of them are approved by USFDA.
In response to an email query from Moneycontrol, Emcure Pharma said: "Please note that, as a company, we continuously evaluate different alternatives for value creation and value maximisation. However, as a policy, we cannot comment on market speculation in such matters."Moneycontrol is awaiting a response from Bain Capital and JM Financial and this article will be updated as soon as we hear from them.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.