3 IPOs get the stamp of approval from SEBI

Even as the situation in Ukraine remained tense and the world markets almost fell vertically, the spate of IPOs on the anvil continues to build up In its latest round of observations (SEBI term for IPO approval), SEBI has given the green signal for the proposed IPOs of API Holdings (PharmEasy), Wellness Forever Medicare Ltd and CMR Green Technologies Ltd. All these companies had filed their DRHP between Sep-21 and Nov-21.

The biggest of these 3 is the much awaited API Holdings (PharmEasy) IPO. This online pharma retailer had filed DRHP with SEBI in Nov-21 for its proposed Rs.6,250 crore IPO, almost entirely a fresh issue. The fresh issue proceeds are expected to be deployed largely to repay debt as well as to bankroll organic and inorganic growth opportunities. PharmEasy is looking at niche players to acquire to help them in their lateral and vertical expansion.

PharmEasy may also seriously explore the idea of a pre-IPO round of fund raising worth Rs.1,250 crore. Depending on the success of this pre-IPO round, the final issue size would be reduced proportionately. However, after the tepid performance of digital IPOs in the last 3 months, many players like MobiKwik, Delhivery and OYO Rooms are waiting on the side-lines rather than rushing to launch their IPOs. PharmEasy may adopt a similar strategy.

The second company, Wellness Forever Medicare, is a retail pharmacy chain that has the backing of vaccine king, Adar Poonawala. Incidentally, Adar Poonawala’s Serum Institute is one of the pioneers of Covishield manufacturing in India. Serum Institute plans to almost entirely exit Wellness Forever Medicare via the offer for sale route. The Wellness Forever IPO will comprise of a fresh issue of Rs.400 crore and an OFS of 16.04 million shares.

Wellness Forever was founded in 2008. Among the founders,  Ashraf Biran and Gulshan Bakhtiani will sell 7.20 lakh shares each while the third promoter Mohan Chavan will sell 12 lakh shares in the offer for sale. The proceeds of Rs.400 crore from the fresh issue component will be used by the company for bankrolling its capital expenditure plans and to set up new stores. Some funds will also help repayment of debt and fund working capital.

Finally, we come to the third CMR Green Technologies IPO. The company is one of the leading metal recyclers in the domestic aluminium recycling industry. SEBI has approved its DRHP filed in September 2021. The IPO comprises a fresh issue of Rs.300 crore and an offer for sale of up to 33.41 million shares by promoters and early shareholders. Proceeds from the fresh issue will be used for the payment of debt and for general corporate purposes.

While the SEBI approval for the 3 issues has already come in, it is not yet clear when these companies would announce their IPOs. The immediate overhang for all the IPO candidates is to first avoid the huge liquidity suction that will happen around the LIC IPO in the second week of March. By the fourth week of March, there will be clarity on LIC listing and also on Fed guidance on rates. These IPOs are more likely to happen in the new fiscal FY23.

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