Gland Pharma to be India’s biggest pharma IPO, check grey market premium; what may worry investors?

By: |
November 3, 2020 4:30 PM

Gland Pharma filed draft papers in July this year and obtained Sebi's observation on October 19, 2020, to float an IPO.

gland pharma IPOGland Pharma would probably be the first major IPO by an Indian company with a Chinese parent

Gland Pharma, which received a go-ahead to launch an initial public offer (IPO) by capital markets regulator Sebi, is likely to be the biggest IPO from the Indian pharma sector. Despite share market volatility, Gland Pharma shares were seen quoting Rs 180 premium per share over the projected IPO price band of Rs 1,300 in the secondary markets. According to the analysts, Gland pharma is expected to be the biggest pharma IPO in Indian share market as this is likely to be around Rs 6,000 crore issue. So far, Eris Lifesciences has been the biggest pharma IPO, which raised Rs 1,741 crore in 2017.

The details such as IPO price band, offer opening date, minimum bid lot size are not released yet. “In the recent years, Gland Pharma has been growing well and this IPO should end the sluggishness in the primary market if the issue is attractively priced,” Abhay Doshi, Gujarat based independent dealer in unlisted shares, told Financial Express Online. The company is also in the API segment along with with injectables which is the most attractive one in the pharma sector.

Gland Pharma first Indian IPO with Chinese parent

This would probably be the first major IPO by an Indian company with a Chinese parent. The company’s promoters are Fosun Singapore and Shanghai Fosun Pharma. In 2017, Fosun Pharma acquired 74 per cent stake in Gland Pharma. Doshi says that it would be interesting to see how the investors respond to a company having a Chinese parent amid Sino-Indian geopolitical tensions.

Gland Pharma filed draft papers in July this year and obtained Sebi’s observation on October 19, 2020, to float an IPO. “The nod from the Securities and Exchange Board of India (Sebi) comes amid a buoyant phase of valuations in the pharma sector and frosty diplomatic ties between India and China due to military aggression in Eastern Ladakh earlier this year, leading to casualties on both sides,” analysts at SMC Global Securities said.

Gland Pharma IPO likely next week

Doshi added saying that Gland Pharma is likely to come up with it’s IPO next week. Currently, it is trading at Rs 180 premium over the expected price band of Rs 1,300 in the grey market. Narottam Dharawat, founder, Dharawat Securities echoed the same views on the premium and offer opening date.

Gland Pharma IPO comprises fresh shares worth up to Rs 1,250 crore and OFS of up to 3.48 crore shares. The offer-for-sale includes sale of up to 1.93 crore shares by Fosun Pharma Industrial Pte Ltd, 1 crore shares by Gland Celsus Bio Chemicals Pvt Ltd, 35.73 lakh shares by Empower Discretionary Trust and 18.74 lakh shares by Nilay Discretionary Trust, according to the draft papers. Gland Pharma shares are proposed to be listed on the BSE and the NSE. Kotak Mahindra Capital Company Ltd, Citigroup Global Markets India Pvt Ltd, Haitong Securities India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd are the book running lead managers to the IPO.

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