India: Fosun-owned Gland Pharma Fixes Price Band For $167m IPO

The company plans to raise up to ₹1,250 crore ($167 million) through issuance of fresh equity and allow its China-based promoter Fosun Pharma Industrial Pte Ltd and continuing shareholder Gland Celsus Chemicals Pvt Ltd to sell a part of their stake.

The company will hold a press conference today to give additional details on the IPO.

As per the red herring prospectus filed with Securities and Exchange Board of India, while the company plans to raise ₹1,250 crore, it will also have an offer for sale of up to 34.9 million shares. Of these, up to 19.4 million will be sold by Fosun Pharma, while 10,047,435 shares will be sold by Gland Celsus. The rest will be sold by two trusts who are also continuing shareholders in the company.

Of the total shares, not more than 50% of the stake will be given in qualified institutional placements, while at least 35% will be available for retail investors. The rest will be available for subscription by non-institutional bidders.

Shanghai-based Fosun acquired a 74% stake in Gland Pharma in 2017 for over $1.2 billion, in what was then the largest acquisition of an Indian company by a Chinese firm.

Gland Pharma is a prominent generic injectables-focused company, and one of the fastest growing in the segment by revenue in the US from 2014 to 2019, as per the company’s filing.

Established in Hyderabad in 1978, the company is today present in sterile injectables, oncology and ophthalmics and also focuses on complex injectables and first-to-file opportunities, among others.

For the fiscal to March, the company reported a revenue of ₹2,772.4 crore, as against ₹2,129.7 crore in the previous year. In 2019-20, it reported a profit of ₹772.8 crore against a profit of ₹451.8 crore in the previous fiscal.

In 2019-20, about two-third of its revenue came from the world’s largest pharmaceutical market, the US, with around 18% coming from India.

The IPO comes at a time when relations between the two neighbours are at rock bottom following deadly border clashes in June. As a fallout, India has banned several Chinese apps and restricted the flow of Chinese capital and goods into India.

All investments from China and Hong Kong are required to mandatorily undergo government scrutiny and approval. This has severely slowed down the flow of Chinese capital into Indian firms, especially tech startups.

However, it seems unlikely that Gland Pharma’s IPO plans will be affected by diplomatic tensions between the two neighbours.

Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Haitong Securities India Pvt. Ltd and Nomura Financial Advisory and Securities (India) Pvt. Ltd are advising the company on the IPO.

The article was first published on livemint.com.