Neogen Chemicals to float their IPO with SEBI’s green signal

Recently receiving a heads up from SEBI, specialty chemical maker Neogen Chemicals Ltd is all set to float an initial public offering (IPO). The offer consists of a fresh issue of equity shares aggregated to 70 crore, and an offer for sale up to 29 lakh equity shares, by selling shareholders.

After monitoring the financial parameters, the company seems to be commercially sound, with total revenue and profit after tax rising over the past few fiscal years. The Securities and Exchange Board of India (SEBI) issued final agreement to Neogen’s IPO proposal on February 8, 2019 according to the information on the regulator’s website.

Neogen is one of the six companies to receive SEBI approval to go public, this year. However, several companies are now rethinking about their plans post-stock markets crisis where it fell after touching a high record in August.

Neogen Chemicals drafted its IPO proposal in 2018. According to its prospectus, the promoters of the firm – Haridas Thakarshi Kanani and Beena Haridas Kanani account for 15.2 million shares (80.8% stake) in the company.

Proceeds of the issue will be directed towards repayment of certain borrowings that were previously owned by the company, its long-term working capital, and for general corporate purposes.

“Our company expects to receive the benefits of listing of equity shares on stock exchanges, including among other things enhancing the visibility of our brand and company,” as per the draft sources.  

For the prospective share buyers, here are some of the pros and cons of Neogen’s IPO:

  • Pros: Wide product range, old name in the industry
  • Cons: Foreign currency dependency, dependence on few client

Publicly listing itself serves various objectives for the firm. Funding the working capital requirements, general corporate expense fulfillment, repayment of borrowing being some of them. The equity shares are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).Inga Advisors and Batlivala & Karani Securities India will manage the company’s initial public offering (IPO).


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