Morepen Laboratories rallies 17% in two days on fundraising plans

Shares of Morepen Laboratories extended their winning run to the second day in a row and jumped nearly 8 per cent to hit a fresh 52-week high on the BSE in Thursday's session after the company board approved raising Rs 433 crore via issuance of shares on a preferential basis.

So far in the two trading sessions, the scrip has gained 17 per cent. The stock of the smallcap pharma firm hit a fresh 52-week high of Rs 59.45 on the BSE today. At 10.55 am, it was trading 2.90 per cent higher at Rs 56.80 as against a decline of 0.31 per cent in the BSE Sensex at the same time.

The company on Wednesday said its board has approved raising over Rs 433 crore through the issue of shares to Switzerland's private venture capital firm Corinth Investment Holdings and Liquid Holdings, a promoter group of the company, on a preferential basis.

"The board of Directors considered and approved issue and allotment of up to 10.85 crore equity shares of the face value of Rs 2 each, on a preferential basis," it said in a regulatory filing.

Morepen Laboratories board approved the issue of up to 5 crore equity shares to Liquid Holdings, an entity belonging to the promoter group of the company, at a price of Rs 38 per equity share, for an aggregate amount of up to Rs 190 crore.

Furthermore, in a separate filing, the company said its board approved the investment proposed by Corinth Group, a global private investment Group headquartered in Switzerland, to the extent of $32.50 million (Rs 243 crore) in Morepen Laboratories out of a total $100 million investment in the promoter group.

Following the shareholder and regulatory approval, Corinth would be allotted 5.85 crore new equity shares on a preferential basis. This shareholding would equate to a 9.41 per cent equity stake in the company on a fully expanded capital base. The balance $67.50 million would be in the promoter group companies, it said.

The board of directors has also approved an allotment of 5 crore fresh equity shares to the promoter group in lieu of the 9.85 crore unsubscribed warrants issued in the last financial year which lapsed due to technical reasons.

The company said total fund infusion in Morepen Laboratories, including investor funds and promoter's equity, will be Rs 565 crore.

The funds would be used in the expansion or scaling up of the company's R&D centre/facilities to meet the significantly enhanced active pharmaceutical ingredient (API) demand.

It will also be utilised for setting up a new API plant to meet the significant ramp-up in scale and pipeline the company is working on. The firm will also use the funds, among other purposes, to establish a facility for finished dosages as per USFDA standards at Morepen's pharma complex in Baddi, Himachal Pradesh to cater to highly sophisticated/regulated markets such as the US and Japan.

Besides, the company would also invest in world-class diagnostics facilities including the manufacture of critical inputs, components and enzymes to meet regulated market standards. It would use the funds to add to the new products and brands under the Dr Morepen umbrella and investment in new-age personal care and skincare brands.

An Extraordinary General Meeting (EGM) of the company will be held on May 20, 2021, to seek the approval of the members for the said preferential issue.