Gland Pharma's Rs 6,480-cr IPO sails through on institutional support

Institutional portion sees 6.4x subscription; HNIs, retail investors give issue a miss

The Rs 6,480-crore initial public offering (IPO) of the Hyderabad-based Gland Pharma managed to sail through on the back of institutional investor support, even as individual investors shunned the issue.

The institutional investor portion of the IPO was subscribed 6.4x. 

Meanwhile, the high networth individual (HNI) portion was subscribed 51 per cent, and retail investor portion subscribed just 24 per cent. 

Of the Rs 6,480 crore, less than a sixth came from these two classes of investors — who had nearly 50 per cent of the issue reserved for them.

Experts said the steep pricing of the IPO made a dent in the HNI and retail demand.

“Usually, HNI and retail investors apply on the last day, with an eye on the grey market premium. In this IPO, when the offer document was filed (in July), the expected price band — based on FY20 numbers — was Rs 1,300-1,350 per share. However, the actual price band came in higher after accounting for its Q1FY21 results, and hence the grey market premium fell,” said Geetanjali Kedia, senior research analyst, SP Tulsian Investment Advisory Services.

“This was the primary reason behind HNIs and retail investors staying away from the IPO. Further, risk-on trade is moving away from defensive sectors like IT, and pharma, as expectations of a Covid vaccine build-up,” she added.

The price band was set at Rs 1,490-1,500 per share. At the top end, the company has a market cap of close to Rs 24,500 crore.

Some said demand could also have been hit by the parentage of Gland Pharma. The company’s promoter is China’s Fosun Group, which had picked up a majority stake for $1.2 billion in 2017. The company’s management had claimed during the roadshows that they run their business independently and the tensions between the two countries do not affect their day-to-day operations.