Indegene files with SEBI for Rs3,200 crore IPO
The latest company to file its draft red herring prospectus (DRHP) with SEBI for its proposed IPO is Indegene Ltd. Now, Indegene Ltd is a healthtech company that is focused on providing value added solutions for the global life sciences industry. But what is really formidable is the pedigree of the company. It is not only backed by private equity firm, Carlyle, but also has the backing of the redoubtable NS Raghavan, one of the co-founders of Infosys along with the original team which included Narayana Murthy, Nilekani, Sibulal, Kris and others. The proposed IPO is likely to have a size of Rs. 3,200 crore and it would be a mix of a fresh issue and an offer for sale by the existing promoters and early investors in the company.
At Rs. 3,200 crore, Indegene IPO will be one of the biggest tech IPOs in the primary market history. For instance, the largest technology IPO was the Rs. 4,713 crore of Tata Consultancy Services (TCS) way back in 2004. That is a full 18 years back. Since then, there has not been a IT / ITES IPO of that magnitude and Indegene will be the second biggest since TCS. Of course, there have been a lot of larger digital IPOs of the likes of Paytm and Zomato, but they don’t qualify as traditional IT / ITES companies. Older IPOs of Infosys and even HCL Tech were much smaller in size. Indegene is an IT / ITES company that predominantly caters to the global life sciences industry, by offering its healthtech solutions.
The Rs. 3,200 crore IPO is likely to be broken up into a fresh issue of Rs. 950 crore and an offer for sale (OFS) of Rs. 2,250 crore. The OFS will entail the sale of approximately 3.63 crore shares by existing promoters and early investors. Carlyle Fund and the N S Raghavan Trust will be among the sellers in the offers as they look to partially offload their stakes in the company. With an OFS size of Rs. 2,250 crore and with 3.63 crore shares on offer, one can decipher an approximate pricing for the IPO at around Rs. 620 per share, but we have to wait for the final announcement on the granular details of the IPO to be announced by the company. That would only happen after the DRHP is approved by SEBI.
There will be a number of participants in the OFS of Indegene Ltd. A key participant in the OFS will be CA Dawn Investments, a unit of Carlyle Fund. The Carlyle outfit current holds close to 4.6 crore shares in Indegene representing 20.8% stake in the company. Out of their holding of 4.6 crore shares, they plan to offload 1.72 crore shares, so nearly half of the OFS will be offered by Carlyle group. In addition, 27 lakh shares will be sold by individual owners like Manish Gupta, Rajesh Bhaskaran Nair and Anita Nair. The balance 1.63 crore will be sold by the remaining investors which will inter alia include Brighton Park Capital and the N S Raghavan Family Office.
The fresh part of the IPO will be largely used to defray the debt of the company. In addition, such funds would also be applied to funding capital expenditure requirements, payment of deferred consideration for one of its past acquisitions and also for funding inorganic expansion opportunities in the business. As per early indications, the company may look at a pre-IPO placement of Rs. 190 crore and if such placement is successfully completed, then the fresh issue component would be reduced proportionately. Just last year in February 2021, the company had raised more than $200 million from Carlyle Group and from Brighton Park Capital, despite the funds situation being tight amidst the COVID pandemic globally.
The company, Indegene, has a 24 year pedigree. It was founded in the year 1998 with the intent of offering solutions that empower the biopharmaceutical, emerging biotech and medical devices companies to be in a position to manage their complete product life cycle ranging from launch products in the market to driving sales consistently through the product life cycles. Being a life cycle management solution, Indegene has been in a position to create long standing and deep relationships with their client companies, especially in the light of the rapid growth of this particular segment of the pharmaceutical industry. That has driven growth in the top line and the bottom line of the company in the last few years.
Coming down to numbers, Indegene reported revenues from operations at an impressive Rs. 1,665 crore in FY22. That is a healthy growing at a clip of 61% CAGR (compounded annual growth rate) between FY20 and FY22. Indegene also recorded profit after tax (PAT) of Rs. 163 crore in FY22. Regarding the growth in profit, it has expanded at an impressive 81% CAGR between FY20 and FY22. The issue will be lead managed by an impressive panel comprising of Kotak Mahindra Capital, Citigroup Global Markets India, J P Morgan India and Nomura Financial Advisory; who will also act as the book running lead managers (BRLM) to the issue.
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