Veeda Clinical Research: A Step Closer to IPO with Refiled Draft Red Herring Prospectus
Veeda Clinical Research, a prominent player in the global clinical research landscape, has recently made headlines by refiling its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). This move is aimed at raising capital through an Initial Public Offering (IPO), marking a significant milestone in the company’s journey since it first filed its IPO papers on September 27, 2021.
Understanding the IPO Structure
The upcoming IPO is structured as a combination of a fresh issue of shares worth up to ₹185 crore and an offer-for-sale of up to 13 million equity shares by various promoters and selling shareholders. The face value of each share is set at ₹2. The offer-for-sale component includes significant contributions from several stakeholders, including Basil Private Limited, Bondway Investments Inc., and prominent individuals such as Dr. S N Vinaya Babu and Harsh Pati Singhania, among others.
In addition to the IPO, Veeda is considering a pre-IPO placement that could raise up to ₹37 crore. This amount, if raised, will be deducted from the fresh issue, showcasing the company’s strategic approach to capital generation.
Allocation of Proceeds
The proceeds from the fresh issue are earmarked for various strategic initiatives. Approximately ₹50 crore will be allocated for capital expenditure, specifically for procuring equipment and machinery. Another ₹35 crore is designated for investment in Bioneeds India Private Limited, a material subsidiary, to enhance its operational capabilities. Additionally, ₹10.89 crore is intended for the repayment of certain borrowings of Bioneeds, while ₹33 crore will support organic growth initiatives, including marketing, technology upgrades, and general corporate purposes.
The Book-Building Process
The IPO will be executed through a book-building process, with a significant portion of the net offer—75%—allocated to qualified institutional buyers. Non-institutional and retail individual bidders will receive allocations of 15% and 10%, respectively. The involvement of leading financial institutions such as Axis Capital Limited, CLSA India Private Limited, and SBI Capital Markets Limited as book-running lead managers underscores the IPO’s credibility and potential.
Veeda’s Growth Trajectory
Founded in 2004, Veeda Clinical Research has established itself as a full-service contract research organization (CRO), offering a comprehensive suite of services across various stages of drug development. The company began its operations in Ahmedabad, Gujarat, and has since expanded its capabilities through both organic growth and strategic acquisitions.
Veeda’s service offerings include early and late-phase clinical trials, Healthy Volunteer Studies (HVS), pre-clinical trials, and biopharma services. The company’s total addressable market (TAM) is projected to grow significantly, from USD 65.4 billion in 2023 to USD 110.7 billion by 2028, reflecting a compound annual growth rate (CAGR) of 11.1%. This growth potential positions Veeda favorably within the expanding clinical research sector.
Financial Performance and Clientele
Financially, Veeda has demonstrated robust growth, with a revenue CAGR of 16.18% between FY 2022 and FY 2024. As of September 30, 2024, the company reported revenue from operations of ₹305.30 crore, with a diversified service distribution that includes 43.31% from clinical trials and 36.79% from HVS.
Veeda serves a diverse clientele, including large pharmaceutical companies, biotech firms, and academic institutions. With over 436 active clients globally, the company has successfully completed numerous studies, showcasing its operational efficiency and reliability in delivering quality research services.
Strategic Acquisitions
In line with its growth strategy, Veeda has made strategic acquisitions to bolster its market position. Notably, the company acquired 100% equity shares of Heads in March 2024 and increased its stake in Bioneeds India Private Limited, reflecting its commitment to enhancing its capabilities and expanding its service offerings.
Conclusion
Veeda Clinical Research’s refiling of its Draft Red Herring Prospectus is a pivotal moment in its growth journey, signaling its readiness to tap into the capital markets. With a solid business model, a diverse service portfolio, and a commitment to innovation, Veeda is well-positioned to capitalize on the growing demand for clinical research services. As the company moves closer to its IPO, stakeholders and investors will be keenly watching its progress and the potential it holds in the evolving landscape of clinical research.