Rakesh Jhunjhunwala-backed Concord Biotech files for an IPO

• Ahmedabad-based Concord Biotech has filed for an IPO, giving its promoter Quadria Capital a way to exit the company.
  
• The IPO will have 20.93 million shares available for subscription.
  
• Late Rakesh Jhunjhunwala’s Rare Enterprises owns a 24% stake in Concord Biotech.
  

Rakesh Jhunjhunwala-backed Concord Biotech has filed its draft red herring prospectus (DRHP) with the market regulator SEBI to raise funds via an initial public offering or IPO.

Concord Biotech is an Ahmedabad-based biotech company that makes active pharmaceutical ingredients or APIs. It is backed by Rakesh Jhunjhunwala’s investment arm Rare Enterprises and Quadria Capital, among others.

Concord Biotech’s IPO consists entirely of an offer for sale of 20.93 million shares, which will see Quadria Capital exiting the company by offloading its entire 20% stake. The private equity firm had invested ₹475 crore in the biopharma company in 2016.

Jhunjhunwala’s firm Rare Enterprises holds a 24% stake in the company.

The company has not yet disclosed the offer price.

Understanding the business of Concord Biotech

Concord Biotech is a biopharma company that makes APIs – a biologically active component of a drug that produces the desired effects.

This Ahmedabad-based API maker has a 20% market share in fermentation-based APIs and supplies to over 70 countries, including the US, Europe, and Japan.

Concord Biotech counts pharma giants like Glenmark and Intas amongst its 200 customers. It currently has a portfolio of 56 brands, 43 formulations, and 22 APIs. It has three manufacturing facilities in Gujarat.

Here is a look at key financial metrics of Concord Biotech:


Source: DRHP

The considerable drop in margins is on account of higher employee costs, energy, and advertising expenses.

Here’s how Concord Biotech stacks up against its peers:


Source: DRHP

What does Concord Biotech want to do with the proceeds of the IPO?

The primary object of the issue is allowing an exit for Quadria Capital, which currently holds a 20% stake in the company. Beyond this, Concord Biotech expects the listing to improve its brand visibility.

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