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Laurus Labs files for IPO; Warburg Pincus, Eight Roads to part-exit

21 August, 2016

Laurus Labs Pvt. Ltd has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to float its initial public offering (IPO), as the Visakhapatnam-based drug ingredients maker seeks to join a string of healthcare companies that have made successful debuts on stock markets over the past year.

The proposed IPO is a mix of a fresh issue of shares aggregating up to Rs 300 crore and an offer for sale by shareholders including private equity firm Warburg Pincus, which is part-exiting. The drug firm is looking to raise money to repay term loans and for general corporate purposes.

Over the past year several healthcare companies have floated IPOs successfully. These include diagnostics chains Dr Lal PathLabs Ltd and Thyrocare Technologies Ltd and hospital chain Narayana Hrudayala Ltd, which was listed earlier this year.

In June, Aster DM Healthcare Ltd, which runs hospitals in India and the Middle East, also filed its DRHP with the capital markets regulator. Another healthcare company, eye-care chain New Delhi Centre For Sight, has also received SEBI approval for its IPO.

Here’s a snapshot of Lauras Labs and the issue.

Size: The issue comprises a fresh share sale to mop up Rs 300 crore and an offer for sale by promoters as well as Warburg Pincus and Eight Roads Ventures.

Bankers: Kotak Mahindra Capital, Citigroup Global Markets, Jefferies and SBI Capital Markets.

Objects of the issue: The firm plans to use the money for partial repayment of long-term borrowings. Around Rs 1,115.28 crore  is the total bank loans that the firm has availed and was outstanding as of 30 June 2016. This included foreign currency loan of $41.82 million.

Company: Laurus Labs, which was founded by Satyanarayana Chava, set up its first dedicated R&D centre in Hyderabad, now in Telangana, in 2006. It initially focused on research in the oncology and anti-retrovirals (ARV) and active pharmaceutical ingredients (API) areas. After making progress in R&D it commissioned it first API manufacturing facility in 2007.

The company now also has a growing synthesis and nutraceutical/cosmeceutical ingredients businesses, and an integrated generics finished dosage forms business. The company operates three manufacturing facilities in Visakhapatnam, Andhra Pradesh. It is setting up two additional manufacturing facilities, one for potent APIs and the other for APIs, intermediates and ingredients.

It also set up an R&D centre in Greater Boston, US, in 2015. As of 30 June 2016, it employed 587 scientists at its R&D centre in Hyderabad and 12 scientists at its R&D centre in Greater Boston, which constituted 25% of its total employee strength.

Laurus Labs owned 32 patents and had 150 pending patent applications, in several countries, as of 30 June 2016. It has launched 59 products since its inception. The company’s key customers include Aspen Pharmacare Ltd, Aurobindo Pharma Ltd, Cipla Ltd, Mylan Laboratories Ltd, NATCO Pharma Ltd and Strides Shasun Ltd.

Financials: The company’s net revenue was Rs 1,791.36 crore in the year ended 31 March 2016 compared with Rs 1,360 crore the previous year. In the same period its net profit more than doubled from Rs 58.36 crore to Rs 132.65 crore.

Investors: Warburg Pincus had acquired a minority stake in the company for about Rs 550 crore ($92 million) in 2014. It currently holds a 30.41% stake in Lauras Labs. FIL Capital Management, part of Eight Roads Ventures,  and Aptuit are the other investors with a 18.52% and 9.17% stake, respectively.

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Laurus Labs files for IPO; Warburg Pincus, Eight Roads to part-exit

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