Chemcon IPO: How momentum in the pharma sector is positive for the company

 

Chemcon Speciality is the only manufacturer of HMDS in India & 3rd largest worldwide. Besides, it is the largest player of CMIC in India. Both these chemicals are predominantly used in pharma sector.

Pharmaceutical and oilfield chemical manufacturer Chemcon Speciality Chemicals’ initial public offering (IPO) is set to open today. With a price band of Rs 338-Rs 340, the company plans to raise up to Rs 318 crore during its three-day public offer which closes on Wednesday, September 23.

On September 18, the company raised Rs 95.4 crore through allotment of 2.806 million shares to anchor investors at Rs 340 per share, according to an exchange notification.

IDFC Emerging Business Fund, IDFC Dynamic Equity Fund, ICICI Prudential Child Care Plan Gift Plan, IIFL Special Opportunities Fund Series 7, HSBC Global Investment Funds, Mirae Asset funds, Canara HSBC Oriental Bank of Commerce Life Insurance Company, Ashmore India Opportunities Fund, Kuber India Fund, Tata Multi Asset Opportunities Fund, Reliance Equity Opportunities AIF Scheme 1, and Abakkus Emerging Opportunities Fund-1 were among the anchor investors.

The book-building IPO consists of fresh issue of up to Rs 165 crore (4.85 million equity shares) and an offer for sale (OFS) of up to Rs 153 crore (4.5 million equity shares). Promoters Kamalkumar Rajendra Aggarwal and Naresh Vijaykumar Goyal will offload 2.25 million equity shares each under the OFS which would result in promoter’s stake reducing from 100 per cent pre-IPO to 74.5 per cent post-IPO. Bids can be made for a minimum 44 equity shares and in multiples of 44 shares thereafter.

The offer is 50 per cent available for qualified institutional buyers (QIBs), 15 per cent from non-institutional investors (NIIs), and 35 per cent for retail investors.

According to the company’s red herring prospectus, filed with market regulator Sebi, the company aims to utilise fresh issue proceeds for capital expenditure towards the expansion of manufacturing facility, working capital requirements, and general corporate purposes.