InvestorQ : Can you tell me about the forthcoming IPO of Gland Pharma?
Deepa Salunkhe made post

Can you tell me about the forthcoming IPO of Gland Pharma?

Arya Nanda answered.
10 months ago

This is the next big IPO that is being talked about. Hyderabad based Gland Pharma will open its initial public offer on November 09, Monday, at an indicative price band of Rs.1490-1500 per share. This will be the largest pharma IPO in a very long time.

The total IPO size will be just shy of $1 billion at Rs.6500 crore. The IPO assumes importance as it is expected to elicit a lot of interest from the public at large as well as from HNIs and institutional investors in the midst of the COVID scenario and the sharp bounce in pharma stocks in India in the last few months.

Gland Pharma has a B2B business model that focuses on manufacture of injectables. This is an area of non-oral generics where India has a very strong share of the global market and Gland Pharma is one of the leaders in this segment.

The IPO will be a combination of fresh issue and offer for sale. The Indian and foreign promoters will be hiving part of their stake in Gland Pharma through this IPO. But the more interesting aspect of the IPO comes from the ownership structure of the company.

The company is 74% owned by Fosun of China and the IPO will reduce the stake of Fosun from 74% to 58.3%. Fosun had actually purchased this stake from PE Fund, Kohlberg Kravis Roberts or KKR a few years back, before Chinese investments became anathema.

However, this IPO should not be much of a problem as it only serves to reduce the stake of the Chinese parent. As a result, the government of India should really have no objection to the issue as it only serves to reduce Chinese stake. It is likely to get a mega response in the market as indicated by the grey market prices and the anchor investor interest.