Macleods Pharma files DRHP for second largest IPO by drug co at Rs 5,000 cr

It is entirely an offer for sale or OFS, company won't receive any of the proceeds

Mumbai-based Macleods Pharmaceuticals, the seventh largest drug firm in the Indian Pharmaceutical Market (IPM), has filed preliminary papers with the capital markets regulator Sebi to raise Rs 5,000 crore through an initial public offering (IPO). This will be the second largest pharma IPO to hit the street after Gland Pharma’s Rs 6,480 crore issue in November 2020.

The IPO market for drug firms seems to be heating up as Pune-based Emcure Pharma’s Rs 5,000 crore issue is around the horizon. Emcure is the parent company of Gennova Biopharma which is making India’s first indigenous mRNA Covid19 vaccine.

As for Macleods, the initial share-sale is entirely an offer for sale or OFS comprising 60.5 million equity shares by the promoters. According to the Draft Red Herring Prospectus (DRHP) a portion of the IPO will be reserved for subscription for eligible employees.

The selling shareholders will be entitled to the entire proceeds of the offer, and the company will not receive any proceeds from the public issue. At present the promoters and promoter group holds 100 percent equity of the company now which has organically grown since inception – through internal accruals, and without raising any external funding from private equity players.

According to market sources the promoters and promoter group would hold 89.9 per cent post the offer.

Giridharlal Bawri (74 years), Banwarilal Bawri (68 years) and Rajendra Agarwal (62 years) are the founders of the company who hail from Rajasthan, and currently hold 34.07 percent share in the company, while the remaining 65.93 percent lie with the promoter group.

Macleods draws 51 percent revenue from the domestic market where it operates in therapy areas like anti-infectives, cardiovascular, anti-diabetic, diabetes, dermatology and hormonal drugs.

Established in 1989, Macleods is the seventh largest company in the IPM for the six months ended on September 30, 2021 based on domestic sales, according to IQVIA.

The company has a deep presence in the IPM with its domestic sales from non-metro cities representing 80 percent of its total domestic sales in FY21.

Macleods posted revenues of Rs 7750 crore with a net profit of Rs 2023 crore in FY21. Its domestic sales have grown at a CAGR of 15.3 percent from FY11 to FY21 compared to 10.8 percent in the domestic sales of the IPM (IQVIA).

Apart from India the company has presence in more than 170 countries across developed and emerging markets in North America, Europe, Africa, Asia, South America etc. Revenue from operations outside India grew at a CAGR of 21.51 percent from FY19 to FY21 and represented 48.27 percent of revenues from operations in Fiscal 2021.

Macleods also has an extensive portfolio of anti-TB products, and has the highest number of WHO prequalified anti-TB products globally with 32 registrations.

Kotak Mahindra Capital Company, Citigroup Global Markets India, Edelweiss Financial Services, ICICI Securities and Nomura Financial Advisory and Securities (India) Private Limited are the book running lead managers to the IPO.