RARE backed Concord Biotech files with SEBI for IPO
One more company that has recently filed the draft red herring prospectus (DRHP) for its proposed IPO is Concord Biotech. Incidentally, Concord Biotech is backed by Quadria Capital Fund and RARE Enterprises. For the uninitiated, RARE Enterprises is the investment vehicle of Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala. It may be recollected that Rakesh Jhunjhunwala passed away in the early hours of Sunday, just a day ahead of the 75ths anniversary of India’s Independence, better celebrated as Azadi ka Amrit Mahotsav.
The IPO of Concord Biotech will be entire an offer for sale (OFS). The OFS will be predominantly done by Helix Investment Holdings Pte Ltd, which is a unit of Quadria Private Equity. In addition, there will also be a reservation for subscriptions by eligible employees. There will be no fresh issue component in the IPO, so there will be no fresh funds coming into the company. The OFS purely leads to change in ownership so it is now capital dilutive or EPS dilutive. However, the listing gives a much better capital market profile to Concord.
In terms of the business model, Concord is among the leading manufacturers of fermentation-based biopharmaceutical APIs. Now, APIs or active pharma ingredients are the inputs that got into the manufacture of medical formulations. Many of the APIs are fairly complex and Divi’s Laboratories is the largest player in the API space in India. Concord Biotech is focused on niche segments like immunosuppressants, oncology, anti-fungal and anti-bacterial segments. Concord has 3 manufacturing facilities located in Gujarat.
Concord Biotech is an Ahmedabad-based biopharma company. For the latest fiscal year FY22, Concord Biotech reported top line revenues of Rs713 crore, an increase of 15.56%in revenues over the previous year. However, like most of the pharma companies, Concord Biotech also faced serious challenges on the operating cost front due to supply chain bottle-necks. As a result, Concord saw net profits in FY22 fall to Rs175 crore from Rs235 crore in the previous fiscal year. Despite the fall in profits, net margins were robust at 24.5%.
Concord Biotech boasts of a portfolio of 56 brands and 65 products. This can be broadly classified into 22 APIs (active pharma ingredients) and 43 formulations. In addition, it has filed over 120 drug master files (DMFs) across several countries. DMF is the European equivalent of an FDA filing in the US. The IPO of Concord Biotech will be lead managed by Kotak Mahindra Capital, Citigroup Global Markets and Jefferies India. They will be also acting as the book-running lead managers (BRLM) to the issue.
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