India’s leading generic and specialty pharmaceutical company, Alkem Laboratories has been granted approval by market regulator Securities and Exchange Board of India (SEBI) to bring its initial public offering (IPO). The issue will comprise of 12,853,442 equity shares through an offer for sale (OFS) by its promoters and other public individual shareholders. As a result, the company will not receive any proceeds from the IPO. Nomura Financial Advisory and Securities (India), Axis Capital, J P Morgan India and Edelweiss Financial Services will be managing the issue. The shares are to be listed in the NSE and BSE.
Alkem is looking forward to sell 10.7% stake in the offer and plans to further expand its operations internationally. The company had filed its draft red herring prospectus (DRHP) with the regulator in August this year.
Founder and Chairman Samprada Singh along with his brother B N Singh established Alkem Laboratories in 1973 as a healthcare marketing company and gradually extended operations into the pharmaceutical business. The company deals in active pharmaceutical ingredient (API), branded and generic drugs. Alkem owns 16 manufacturing facilities including two overseas plants and operations spread over 55 countries. Collectively, the promoter group holds 70% stake in the company with Samprada Singh and B N Singh holding a share of 31.75% each.
Mumbai-based Alkem has not raised any private equity (PE) funds in the past and remains a zero-debt company. It sells over 736 branded generic drugs including the blockbuster Clavam drug which has an annual turnover of around INR2.15 billion. Alkem’s other major brands include anti-infectives like Taxim and Taxim-O, Pan 40 and Pan D. About 13 of the company’s brands featured among the top 300 pharma brands in India during FY2015.
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IPO market booming but not exactly
IPO of Alkem Laboratories would be the biggest one in pharmaceutical segment. The only other pharmaceutical company to bring IPO this year is Syngene International Limited with its INR5.5 billion issue. With an exception of Syngene, stock market has not been kind to pharma companies in recent years. Most recently, Pune-based Emcure Pharmaceuticals withdrew its IPO application in June 2014. Prior to this, Intas Pharmaceuticals received an expedited clearance from SEBI for an IPO in September 2013 but did not launch the public offer. Similarly, Calyx Chemicals & Pharmaceuticals’ IPO plans received SEBI approval in January 2013 but the public offering did not materialize.