Pharmacy retail chain MedPlus gets India’s bourse approval to launch IPO

INDIA – MedPlus Health Services Ltd, India’s second-largest pharmacy retailer, announced that the Securities and Exchange Board of India (SEBI) has approved its initial public offering (IPO) to raise up to US$ 220 million (Rs 1638.71 crore).

The Hyderabad-based pharmacy retail chain had submitted a Draft Red Herring Prospectus (DRHP) to SEBI in preparation for an IPO in August 2021.

The IPO consists of a fresh issuance of equity shares worth US$80.6 million (Rs 600 crore) and an offer for sale (OFS) of up to equity shares worth US$ 139.6 million (Rs 1,038.71 crore) by the promoter and existing shareholders.

The OFS consists of equity shares worth up to Rs 450 crore held by Lone Furrow Investments, equity shares worth up to US$67.2 million (Rs 500 crore) held by PI Opportunities Fund – I, and equity shares worth up to US$119.2 million (Rs 88.71 crore) held by other selling shareholders, which include certain entities and individual selling shareholders.

The net proceeds will be used to fund working capital requirements and general corporate purposes, according to the company.

The net proceeds will be used to fund working capital requirements and general corporate purposes, according to the company.

Madhukar Gangadi, the MD and CEO, founded MedPlus in 2006 with the vision of creating a trusted pharmacy retail brand that offers genuine medicines and provides better value to customers by reducing inefficiencies in the supply chain through the use of technology.

As of March 31, 2021, the company operated India’s second-largest pharmacy retail network, with over 2,000 stores spread across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal, and Maharashtra.

In other related news, Star Health and Allied Insurance Co, an Indian health insurance provider, is aiming for a US$7 billion valuation in its initial public offering, according to an article published by Reuters.

According to a bookrunner’s document, it is looking to raise 72.49 billion rupees (US$974.23 million) and has set a price band between US$11.69 (870 rupees) and US$12.10 (900 rupees) per share.

It is backed by ace Indian investor billionaire Rakesh Jhunjhunwala. The offer will be available for subscription on November 30th.

India's booming IPO market

The IPO filing comes at a time when several companies, including prominent startups, are going public in order to capitalize on the booming Indian stock market, which is experiencing massive liquidity and increased retail investor participation.

According to the company’s prospectus, the proceeds will be used to improve the capital base and maintain solvency levels.

The company’s shares are expected to be listed on the Mumbai stock exchange around December 10, making Star Health the first insurance provider to go public since 2017.

In November, PharmEasy went public after receiving a nod from SEBI and filed for an IPO worth US$840 million (Rs 6,250 crore).

The pharma retailer intended to use the proceeds to invest in three core areas: marketing and promotional activities, supply chain infrastructure and fulfilment, and technology infrastructure upgrades.

PharmEasy has raised over US$1.2 billion in equity and debt funding to date, with its most recent significant transaction being the $600-million acquisition of diagnostics chain Thyrocare in June of this year.

PharmEasy was also the first unicorn in the online pharmacy start-up world, having achieved the coveted status in April 2021.

AI giant, Exscientia, launched an initial public offering and private placement in October and raised US$464 million to fund its artificial intelligence-based approach to drug discovery and development.

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