74% Chinese-owned Hyderabad pharma firm files for IPO

HYDERABADMUMBAI: In what is one of the first Chinese majority owned companies to eye a listing on the Indian stock exchanges, Hyderabad-based Gland Pharma has filed a draft red herring prospectus (DRHP) with Sebi. The company wants to raise over Rs 1,250 crore through an initial public offering (IPO).
The DRHP filing comes less than a month after the Galwan Valley clash between Indian and Chinese troops left 20 Indian soldiers dead and resulted in the Indian government banning 59 Chinese apps.
In addition to the fresh issue of shares, the promoters plan to offer up to 3.48 crore shares to the public, including 1.93 crore shares held by Fosun Pharma, up to a little over 1 crore shares held by Gland Celsus Bio Chemicals, 35 lakh shares by Empower Discretionary Trust and 18.74 lakh shares by Nilay Discretionary Trust.
The fresh issue and the offer for sale together is expected to take the IPO size to around Rs 3,000 crore, sources said, adding that post-offer the public shareholding in the firm is expected to be about 25%. Gland Pharma plans to use the proceeds of the IPO to fund its incremental working capital, capital expenditure needs, and for general corporate purposes.
Chinese pharma giant Fosun Pharma (Shanghai Fosun Pharmaceutical Group) holds 74% stake in Gland through Fosun Singapore. Fosun Pharma’s acquisition of Gland Pharma in October 2017 was the single largest Chinese investment in India at around $1.1 billion when it was made.
Initially, Fosun wanted to acquire a little over 86% stake in Gland but was forced to scale it down to 74% after the Indian government flagged concerns over proprietary technology developed by the Indian firm going into the hands of a Chinese pharma company.
This happened in August 2017 when India and China were locked in a border standoff at Doklam. The investment proposal was recommended to the Cabinet Committee on Economic Affairs by the erstwhile Foreign Investment Promotion Board (FIPB) in April 2017.