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Last Updated : Mar 24, 2020 12:46 PM IST | Source: Moneycontrol.com

Goldman Sachs, PremjiInvest-backed MedPlus prepares for first IPO by a pharmacy chain

Another source said MedPlus is looking to raise between Rs 800 crore and Rs 1,000 crore via the IPO

MedPlus, India’s second largest retail pharmacy chain, has invited merchant bankers for pitches for a proposed IPO in FY21 even as the domestic market was singed in the global meltdown, sources told Moneycontrol.

“The company held initial discussions with merchant bankers and is likely to shortlist at least three of them for the proposed listing. Due to the fallout of the coronavirus pandemic, the market has tanked further post these deliberations, so the selection of advisors may take time," said a source.

"Valuations have been badly hit due to the current conditions and it is unclear when the process will be launched. The promoters wanted to get feedback and will take a call once things settle down, but the initial plan was to target late FY21," the source added. If these plans fructify, it will set a precedent as MedPlus would become the country’s first listed retail pharmacy chain.

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Another source said MedPlus is looking to raise between Rs 800 crore and Rs 1,000 crore via the initial public offering (IPO) and this is likely to be a mixture of primary and secondary issue of shares. "The listing will help reduce debt at the promoter level and also provide growth capital for store expansion.”

In November last year, MedPlus founder and CEO Madhukar Gangadi, a Wharton graduate, said the Hyderabad- headquartered chain was looking at an IPO to raise more than Rs 700 crore. Moneycontrol.com is awaiting a response from MedPlus promoter Madhukar Gangadi and has sent email reminders. This article will be updated  as soon as we hear from the firm.

In January 2018, MedPlus raised around $115 million in debt financing from Goldman Sachs to buy out its existing private equity investors, including US-based Mount Kellett Capital Management, TVS Capital Funds and Ajay Piramal’s India Venture Advisors. The three investors together held a 69 percent stake in MedPlus. Later, Azim Premji's investment arm PremjiInvest picked up a minority stake for around Rs 200 crore.

On July 17, 2018, Factordaily.com reported that Amazon was in early talks to invest in MedPlus.

MedPlus operates around 1,650 stores, of which about 100 are run through the franchisee model. The total number of retail pharmacies in India is estimated to be 850,000 and less than 5 percent, or around 6,000, come under organised pharmacy stores.

Largely focused on south India until now, the 14-year-old MedPlus has expanded to West Bengal, Odisha and Maharashtra. The company claims on its website that it serves around 3.5 lakh customers a day and has more than 10,000 employees. The pharmacy chain also operates online store MedPlusMart, lab testing centres MedPlus Pathlabs and surgical equipment distribution business RiteCure.

The company is targeting to end FY20 with Rs 2,600-2,700 crore in revenue and an EBITDA of Rs 70-75 crore, with around 17-18 percent of overall business generated through the digital platform.

The  Indian retail pharmacy segment is estimated to be worth $18 billion and is expected to touch $50 billion by 2025, data from the Department of Industrial Policy and Promotion revealed. Other significant players in the domestic retail pharmacy segment included Netmeds, Medlife and market leader Apollo Pharmacy.

 

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First Published on Mar 24, 2020 12:46 pm
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