58.5 million Equity to Corinth (9.31% equity stake)
50.0 million Warrants to promoters (4.86% increase in the holding)
New Delhi, NFAPost: Morepen Laboratories Limited, a leading manufacturer of high-quality APIs, home diagnostics, formulations, and OTC products, approved the incoming investment of Rs. 433 crore in the Extra-Ordinary General Meeting (EGM) of the company.
The members approved the issue and allotment of 58.50 million equity shares for cash to Corinth Investment Holdings AG, Switzerland (www.corinthinvest.com) at Rs.41.60 per share aggregating to Rs 243.36 crores.
Shareholders also approved 50 million fully convertible warrants to a promoter group company Liquid Holdings Private Limited at Rs 38 per warrant/share aggregating up to Rs 190 crores for cash to be converted into equity within 18 months, within the limits prescribed in SEBI (SAST) Regulations for acquisition of share/ voting rights in a financial year. The issue price of aforesaid securities is derived as per pricing formula prescribed by SEBI in SEBI (ICDR) Regulations.
Convertible equity
The meeting of the shareholders of Morepen Laboratories was held on 20th May, 2021through video conferencing and other audio visual means. Shareholders also overwhelmingly voted to approve the resolution for issuance of convertible equity shares and warrants as proposed by the Board, over 99.97% voted in favour of the proposal.
This is a milestone for the company as this approval paves the way to drive exponential growth and create value for all stakeholders.
This EGM was the next step for inclusion of Corinth Group, a global private investment Group, headquartered in Switzerland, which announced an extended USD 32.50 million in Morepen Laboratories Limited, out of a total USD 100 million investment in the promoter group.
Healthcare sector
Morepen Labs Ltd Chairman and Managing Director Sushil Suri (www.morpen.com) said the investment by Corinth further bolsters the company’s position as a market leader in Indian healthcare, it also endorses our approach in the self-diagnostic tools category along with the scale and potential of the API market.
“It is a testing time for life sciences and pharmaceutical companies, in these challenging times we are all geared to enhance our capacities and also expand our markets,” said Sushil Suri.
Corinth Group’s Advisory Board Chairman and Nobel Prize laureate (2010) in Economics Christopher Pissarides had said the investment into Morepen follows from our increased focus on emerging markets, and in particular the health and pharmaceutical industry.
“India is a key global market with significant growth opportunity, and we look forward to working with management to help the business develop while catering to a rapidly growing sector,” said Christopher Pissarides.
Regulatory requirement
Speaking about the opportunities that the Indian market presents, Corinth Capital Fund CEO Andreas Matsas said the company is bullish about the Indian market and have already started the process of setting up a dedicated full-service office in Delhi, India, through a wholly owned subsidiary which will be functional in May 2021.
“We are actively working towards setting up an AIF, in line with Indian regulatory requirements, to cater to the Indian market. Our Investment into Morepen Group establishes Corinth’s long-term commitment to the Indian market, with ongoing investments of another USD 200 million in the Agri and Logistics sector undergoing due diligence,” said Andreas Matsas.
Morepen Group has been growing exponentially since the last four quarters in spite of restrictive business situations and has posted excellent results for FY21 recording stunning growth of 39% in the net revenue and a stellar 189% jump in net profits after tax as compared to FY20.
Diagnostics business
Earnings per share for the company has also jumped 189% in the same period to Rs. 2.16 per share as compared to Rs. 0.75 per share last year. Company has presence in over 80 countries with exports contributing to 40% in the total revenue and 69% of the API revenue.
Morepen’s point of medical devices and diagnostics business is also breaking all records and has registered a growth of 71% in the FY21 with increased demand of medical devices for home use in the middle of pandemic and general health concerns and changing lifestyle. The Company plans to expand the medical devices business and has plan to investing heavily on creation of world class facilities with large capacities and at some stage demerge this business into a separate wholly owned subsidiary.
The Total Fund Infusion in Morepen Laboratories Ltd, including investor funds and promoter’s equity would be used in:
a) The expansion/scaling up of the company’s R&D centre/facilities to meet the significantly enhanced Active Pharmaceutical Ingredient (API) demand, a market size of US$40 billion, that Morepen has in the pipeline for the next 3 years
b) Setting up new USFDA standard API plant to meet the significant ramp up in scale and pipeline the company is working on
c) Establishing a world class 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 USA and Japan
d) Investment into world class diagnostics facilities including the manufacture of critical inputs/components/enzymes to meet regulated market standards. India is seeing an exponential jump in household spend on Point of Care/Home Diagnostics and Oxygen Concentrators and other life support systems with demand currently outstripping supply
e) Investment in new products and brands under the Dr Morepen umbrella, an existing household brand, to leverage its pan India distribution/supply chain and exponential growth in online sales
f) Investment in new age Personal Care/Skin Care brands “Gubb” and “Happier” that are seeing exponential online sales, as well as to leverage our Pan India pharmacy/retail chain network to significantly scale up distribution
