Rakesh Jhunjunwala, healthcare-focused PE firm Quadria Capital, and other existing shareholders of Concord Biotech Ltd are likely to dilute part of their stakes in the company, as the active pharmaceutical ingredients (API) maker prepares for an initial public offering (IPO), said two people aware of the development.
The Ahmedabad-based company promoted by Sudhi Vaid is involved in manufacturing fermentation and semi-synthetic biopharmaceutical APIs with immunosuppressants as its key therapeutic segment.
“The company has kick-started work on the IPO. Kotak Mahindra Capital, Citi, and Jefferies are working on this deal,” said the one of the persons mentioned above requesting anonymity, as he is not authorized to speak with the media.
“Currently, the plan is to go for a 100% offer for sale, so there is no plan to raise fresh capital as the company has strong operating margins and enough cash to fund current growth plans. The shareholders are yet to finalize the exact quantum of shares that each one of them will sell, but it is most likely that all the shareholders, Jhunjunwala, Qaudria, and even the promoters will sell part of their shareholdings in the IPO,” he said.
The company is targeting an IPO of ₹2,000- ₹2,500 crore and plans to list within this calendar year, he said.
In 2005, Hyderabad-based drug maker Matrix Lab bought a 58% stake in Concord. However, when it was acquired by generic drug maker Mylan NV in 2006, Matrix sold its stake in Concord back to the promoters and asset management firm Rare Enterprises, which is owned by Jhunjhunwala.
In 2016, Quadria Capital invested ₹500 crore for a 20% stake in Concord Biotech. Jhunjunwala holds around 24% stake in the company.
The company recorded a revenue of ₹616.4 crore in FY21, a growth of 20.3% over a revenue of ₹512.3 crore in FY20, according to data from the registrar of companies. It reported a profit of 235.29 crore in FY21, against a profit of ₹168.9 crore in FY20.
The company, by virtue of operating in a market segment that does not have much competition, is able to get healthy margins, noted rating agency Icra in a February 2021 report.
Emails sent to Concord Biotech, Jhunjunwala, Qaudria, Citi, and Kotak remained unanswered till press time. A spokesperson for Jefferies declined to comment.
the App to get 14 days of unlimited access to Mint Premium absolutely free!