Eris Lifesciences has filed draft prospectus with SEBI for its upcoming IPO. Eris Lifesciences IPO will involve sale of 28,875,000 shares by existing shareholders. Leading the pack of these selling shareholders will be Botticelli which will sell 22,344,000 shares while CEO Amit Bakshi will also sell some shares. Himanshu Shah, Inderjeet Singh Negi, Rajendrakumar Rambhai Patel, Kaushal Kamlesh Shah, Bhikhabhai Chimanlal Shah, Rakeshbhai Bhikhabhai Shah and Hetal Rasiklal Shah will offer the remaining shares in the IPO.
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The Ahmadabad-based specialty pharmaceutical player counts ChrysCapital among its investors. According to the draft prospectus, ChrysCapital’s investment arm Botticelli held 22,344,000 shares or 16.25% equity stake in Eris Lifesciences. This means ChrysCapital will be selling its entire stake in the company started by Amit Bakshi some 10 years ago. ChrysCapital had invested nearly INR160 crore (INR1.6 billion) in Eris Lifesciences in 2011. This investment is likely to fetch multibagger returns to the PE firm whose average cost of acquisition is INR87.27 per share.
Eris Lifesciences IPO: High margin generics
Eris Lifesciences manufactures and sells branded generics in the high margin super-specialty niches such as diabetes and hypertension. Before starting Eris Lifesciences, Amit Bakshi spent nearly 12 years in the pharmaceutical industry in various capacities at Torrent Pharma, Ely Lilly and Intas. This experience has surely helped the company in registering strong revenue and profit growth. As mentioned in the draft prospectus, Eris Lifesciences’ consolidated revenues were INR597 crore in FY2016 with net profit of INR133.6 crore. This reflects an exceptionally strong net profit margin of 22.4%. More importantly, the company’s top and bottomline has grown in each of the last four years.
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Pharma and healthcare IPOs have found enough buyers in India and a soaring secondary market has made things easy. Another generics player Alkem Laboratories raised INR1,350 crore in 2015 through its IPO which went on to generate excellent returns for IPO investors. More recently, PE-backed Laurus Labs IPO also rewarded investors positively. Healthcare IPOs such as Dr Lal Pathlabs, Thyrocare Technologies have also done well post listing in a strong indication of rising IPO appetite among investors.