TPG Asia, HBM India to win big in Sai Life Sciences’ upcoming IPO

The IPO consists of a fresh issue of shares worth ₹950 crore and an offer for sale (OFS) of 3.81 crore shares with a face value of Re 1 each, bringing the total issue size to ₹2,940-3,043 crore. The company plans to use 75% of the IPO proceeds to repay or prepay in full or part certain outstanding borrowings, and the remaining for general corporate purposes.

The company has fixed the price band at ₹522 to ₹549 per equity share. At the upper end of this range, Sai Life Sciences will have a market capitalisation of ₹11,419 crore. TPG Asia and HBM Private Equity India will sell about 29.3 million shares combined under the OFS component. With an average acquisition price of ₹127.27 and ₹42.71, respectively, they stand to make gains of 4x to 13x at the upper end of the price band.  

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The OFS also includes the sale of 6.4 million shares by promoter group Sai Quest Syn Pvt Ltd (average acquisition price: ₹10.11). Other shareholders who will sell shares include Bharathi Srivari ( ₹1), Raju Penmasta ( ₹0.82), Jagdish Viswanath Dore ( ₹127.30), Rajagopal Srirama Tatta ( ₹6.78) and Dirk Walter Sartor ( ₹10.40)

The company has appointed Kotak Mahindra Capital, IIFL Capital Services, Jefferies India and Morgan Stanley India to help with the IPO. Its shares are expected to list on the BSE and NSE on 18 December.

Smart bets

In 2018, TPG Capital invested around $135 million in Sai Life Sciences for a 43.4% stake. HBM Private Equity India had a 6% stake, while the balance was held by the founder family and promoter group. Earlier this year, American private equity major Bain Capital was the frontrunner to acquire a majority stake in the company while TPG and other investors were looking to make a complete exit, according to a report by Moneycontrol. 

Founded in January 1999, Hyderabad-based Sai Life Sciences Ltd collaborates with leading pharmaceutical and biotechnology companies, offering services in drug discovery, development, and the manufacturing of small-molecule new chemical entities (NCEs).

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As a contract research, development and manufacturing organisation (CRDMO), the company uses its expertise to address critical challenges in healthcare. It works with global pharmaceutical and biotech innovators, and has more than 170 pharmaceutical products in its portfolio, including 38 products for manufacturing 28 commercial drugs.

Sai Life Sciences reported revenue from operations of ₹1,465.1 crore in FY24, up from ₹1,217.1 crore a year earlier. Profit rose to ₹83 crore from ₹9 crore over the same period. In the six months to September, it reported revenue of ₹675.2 crore against ₹642.3 crore in the same period last year. 

IPO boom

As many as 298 companies have listed on the NSE and BSE this year, about 22% more than last year, according to S&P Global Market Intelligence data. These include new-age startups such as Swiggy, Ola Electric, FirstCry, Unicommerce and Blackbuck. Favorable market conditions, economic growth and improvements in the regulatory framework have helped companies raise record amounts in 2024. Mobikwik, Vishal Megamart and Inventurus Knowledge are also looking to tap the public markets this month. 

Aakash Agrawal, associate director – digital & new-age business, Anand Rathi Investment Banking, said, “The IPO market in general has certain time frames when it is more accepting to large IPOs. Companies and their advisors usually try to time their listings in accordance with these windows, which may last for years at a stretch but sometimes have a shorter time frame based on macro trends and overall sentiment.”

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Agrawal said many startups are taking the IPO route as the venture capital firms that invested in their early rounds are seeing their funds’ life cycles coming to an end.

“When companies and promoters believe that a company has attained a level of maturity and scale where there will be predictive cash flows and double-digit growth, an IPO becomes the preferred route as it provides liquidity to early investors and significant cash infusion into the company’s balance sheet, while also giving added advantages like QIPs and other placements that the likes of Zomato have tapped for their projected cash requirements.”

“One can expect the IPO market to be conducive to listings for the foreseeable future and in 2025. However, based on macros and sentiment, this trend could pause or reverse in a short span of time,” Agrawal added.