The planned share sale comes after the Pune-based company demerged from Avet Pharmaceuticals, its US arm, the people said.
The IPO will consist of new shares and an offer for sale from its promoter Satish Mehta and investor Bain Capital, which acquired about 13 per cent stake in the company in 2014. While the company is looking to dilute up to a 20 per cent stake, it’s not clear whether Bain intends to sell its entire stake.
“Besides expansion, the company expects to reduce its debt burden using part of the proceeds of the IPO, which could be launched in a month or two,” said one person.
Emcure may appoint as many as six bankers for the IPO including JM Financial, Kotak Capital, Axis Capital and SBI Capital, the people said. The terms are likely to be decided in the next few weeks.
An email query sent to Emcure and Bain Capital did not elicit any response until press time Sunday.
The Emcure IPO could be the second-biggest in India’s pharmaceutical sector. Hyderabad-based Gland Pharma raised about Rs 6,500 crore in an IPO last year. Eris Lifesciences raised Rs 1,741 crore in 2017, while Alkem Laboratories and Laurus Labs raised about Rs 1,350 crore each in 2015 and 2016, respectively.
Emcure’s total debt was Rs 1,224 crore as of March 31, 2019, and is currently estimated at more than Rs 1,500 crore. It is said to be aiming for a zero-debt tag. The company reported a net profit of Rs 284 crore on a turnover of Rs 2,454 crore in the year ended March 2019.
Emcure first planned to go public with a Rs 500 crore offering in 2014 but did not pursue it after Bain Capital invested about Rs 226 crore in the company, which took care of its immediate liquidity needs. Bain was said to have purchased Blackstone’s 13.09 per cent stake in Emcure for about Rs 650 crore in 2014.
Last year, Emcure decided to restructure its US business, which faced regulatory issues, and investment bank JM Financial was mandated to demerge the domestic formulation business into a separate company.