Private equity firm ChrysCapital-backed Eris Lifesciences Ltd has received the Securities and Exchange Board of India’s (SEBI) approval for an initial public offering.
The capital markets regulator issued final observations on the IPO proposal of the Ahmedabad-based pharmaceutical company on 28 April, the SEBI website showed. Eris became the 12th company to receive regulatory nod this calendar year.
Eris had filed its draft red herring prospectus (DRHP) on 8 February to provide a complete exit to ChrysCapital’s investment arm Botticelli, besides allowing a partial sale by promoters.
An IPO and subsequent listing on stock exchanges will help Eris join a clutch of pharmaceutical companies that have either gone public over the past couple of years or have been planning to do so.
Syngene International Ltd, the contract research services arm of Bengaluru-based biopharmaceutical company Biocon Ltd, went public in July 2015 with its Rs 550-crore IPO.
Alkem Laboratories Ltd, India’s fifth-largest drugmaker as per domestic sales, tapped primary markets in December 2015 with a Rs 1,350-crore IPO.
Hyderabad-based drugmaker Laurus Labs Ltd, backed by private equity firm Warburg Pincus, floated its Rs 1,360-crore IPO in December 2016.
A clutch of companies in the broader healthcare sector have also gone public in the past 18 months. These include diagnostics companies Dr. Lal PathLabs Ltd and Thyrocare Technologies Ltd, and hospital chains Narayana Hrudayala Ltd and Healthcare Global Enterprises Ltd.
VCCircle reported late last year that Capital International-backed Mankind Pharma Ltd was also planning an IPO.
Meanwhile, PE-backed drugmakers Intas Pharmaceuticals Ltd and Emcure Pharmaceuticals Ltd had considered an IPO in the last four years but withdrew after their investors struck secondary PE deals.
Snapshot of the Eris Lifesciences IPO
Issue size: The IPO of the Ahmedabad-based branded formulations company comprises 28.87 million shares through an offer for sale by ChrysCapital and promoters. This represents 21% stake dilution on a post-offer basis.
The issue size is estimated to be around Rs 2,000 crore. This will value Eris at Rs 9,500-10,000 crore.
ChrysCap’s investment arm Botticelli is selling its entire 16.25% stake, or 22.34 million shares, through the IPO.
Its average cost for acquiring this stake from 2011 through 2016 is Rs 87.27 a share, as per information made available in the DRHP.
ChrysCap will exit the firm and would get around there-fourths of the issue proceeds.
The firm’s founder Amit Bakshi holds a 39.97% stake, and has opted to sell a 0.5% stake. Other selling shareholders include Rakesh Shah, Rajendra Patel, Kausal Shah and Inderjeet Negi.
Bankers: Axis Capital, Citibank and Credit Suisse are the bankers to the issue.
Lawyers: Law firm Shardul Amarchand Mangaldas & Co is representing Eris and selling shareholders, including ChrysCap. Khaitan & Co and Sidley Austin LLP are Indian and international legal counsels, respectively, to the merchant bankers managing the IPO.
Company:
Eris Lifesciences was founded in 2007 by sales professional-turned-entrepreneur Amit Bakshi. It had 2,287 employees across India as on 30 September 2016. It has a network of 1,310 marketing representatives.
Before founding Eris, Bakshi worked for leading pharmaceutical companies Eli Lilly and Intas Pharma.
Eris develops, manufactures and sells branded pharmaceutical products in chronic and acute categories in select therapeutic areas such as cardiovascular, anti-diabetics, vitamins, gastroenterology and anti-infectives. Its focus has been on developing products linked to lifestyle-related disorders.
The chronic category contributed 65.4% to Eris’ revenue for the six months ended September 2016, compared with 64.2% in 2015-16, as per the DRHP.
Financials:
Eris Lifesciences reported a consolidated net profit of Rs 129 crore on operating revenue of Rs 370 crore for the six months ended 30 September 2016, according to the prospectus.
For 2015-16, revenue from operations stood at Rs 597 crore compared with Rs 545 crore the previous year. Consolidated net profit for 2015-16 was Rs 133 crore compared with 89 crore the year before.
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