In a bid to unlock value, leading drug maker Glenmark Pharmaceuticals is likely to launch the much awaited IPO (initial public offer) of its API (active pharmaceutical ingredients) arm Glenmark Life Sciences in July 2021 and raise upto Rs 1,700 crores, sources with knowledge of the matter told Moneycontrol.
“As of now the plan is launch the deal next month, in mid-July. Based on final valuations, the size of the IPO is likely to be between Rs 1,500 crores to Rs 1,700 crores and may vary later,” said one of the individuals cited above.
Two other individuals also confirmed the launch timeline plans.
“With some exceptions, the API bull run has just begun in India due to the high growth potential in the segment. That’s the reason many private equity players like Advent, Carlyle and TPG are investing heavily in this space and creating platforms,” said a fourth individual, a keen observer of the pharma sector.
All the four individuals above spoke to Moneycontrol on the condition of anonymity.
Glenmark Pharma did not respond to an email query from Moneycontrol.
THE GLENMARK API LISTING
Kotak Mahindra Capital, BofA Securities, Goldman Sachs, DAM Capital, SBI Capital and BoB Capital are the investment bankers working on the Glenmark Lifesciences IPO. Trilegal & S&R Associates are the legal advisors.
The IPO will provide investors the option of betting on a pure play API business and can also help to reduce the debt burden at the parent level.
According to the DRHP, the proceeds from the IPO will be used for:a) Payment of outstanding purchase consideration to the promoter for the spin-off of the API business
c) General corporate purposes
On 26th April, 2021, Glenmark Pharmaceuticals shared the following details in a disclosure to the exchanges.
“We wish to inform you that Glenmark Life Sciences Limited, a wholly owned subsidiary of Glenmark Pharmaceuticals Limited, has today, i.e. on April 16, 2021, filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offer, comprising of a fresh issue of up to Rs 11,600 million and an offer for sale of up to 7,305,245 equity shares of Rs 2 each of Glenmark Life Sciences Limited, by Glenmark Pharmaceuticals Limited. The IPO will be subject to market conditions, receipt of applicable approvals and other considerations,” the firm said.
“Net debt remains elevated at Rs 3,600 crore, although Glenmark managed to reduce it by Rs 180 crore during the quarter,” said Emkay Global in its report on Glenmark Pharma released back in August 2020.
GLENMARK PHARMA: THE API ANGLE
Two years ago, Glenmark Pharmaceuticals had attempted to sell a minority stake in its API business to private equity funds but those plans did not fructify. According to its website, Glenmark Lifesciences supplies over 130 APIs to more than 700 customers across 65 countries in North America, Europe, Japan, Latin America, MENA, Asia, Russia and the Commonwealth of Independent States. It has five manufacturing plants in India with an annual production capacity of over 450 metric tonnes based on details available in April, 2021.Post the Q3FY21 results, the management had indicated that the API growth outlook remains strong for the next two-three years owing to a favourable demand-supply scenario. For the third quarter of FY 2020-21, Glenmark’s consolidated sales was at Rs 2,761 crore as against Rs 2,657 crore recording an increase of 3.88 percent. In the same quarter, Glenmark Life Sciences Limited registered consolidated revenue including captive sales of Rs 501 crore as against Rs 409 crore, recording a growth of 22.35 percent.