Bennett Coleman & Co Ltd (BCCL)-backed healthcare start-up firm of the Yash Birla Group, Birla Medspa, is looking to raise Rs 65.17 crore through a maiden public float. The two-year-old firm that is engaged in the business of beauty and healthcare treatments, health and fitness centres operates healthcare centres under the brand name Evolve. It has three company owned and operated Evolve centres in Mumbai besides two centres on franchise basis at Thane and Chennai.
The company intends to use the IPO money to meet the capital expenditure for establishing 55 outlets of Evolve Medspa across various cities, to meet expenses towards brand promotion and for working capital requirements for running the above centres.
BCCL invested through subscription of warrants in March’09. The warrants converted into equity shares last month translating into a deal worth Rs 15 crore that gave the media firm 23.96% stake at per share cost of Rs 14 a piece.
While the promoter group firm owns 62.47% stake in the company, another original member of the venture Dr Abhijit Desai owns 0.5% stake. The rest is with some other shareholders including erstwhile foreign partner Pacific Healthcare Holdings of Singapore.
Originally, Yash Birla Group had entered into an equal equity JV with Pacific Healthcare Holdings (one of East Asia’s leading healthcare providers with facilities in Singapore, Hong Kong and China) and Dr Desai, to form Birla Pacific Medspa Pvt Ltd.
The company proposed to enter into various healthcare services business besides manufacturing soaps and other related consumables even as it never actually started the production of such products. The idea was to leverage experience of foreign partner and backing of Yash Birla group( with interests in steel pipes, machine tools, iron castings, power solution products, pumps, electrical appliances, textiles, etc) to grow business in an area that is largely dominated by unorganised sector players.
However, the JV came unstuck early this year after the foreign partner’s stake got diluted. But it has decided to support the venture and as a minority shareholder. Pacific Healthcare has also decided not to enter into any competitive business with Birla Pacific Medspa.
Given the present shareholding, if Yash Birla group intends to maintain over 50% stake (post issue), the firm can issue a maximum of 11.15 million shares. Given the fund proposed to be raised this would mean issue price of around Rs 58 per share. At this price the firm would be valued at around Rs 325 crore or around $68 million. At this price, BCCL would be sitting on unrealised net gains of around 3x.
For the six months period ended March’10, the firm had total income of around Rs 1.5 crore with net loss of Rs 3.2 crore. This could mean the firm is looking at pretty stretched valuations if the promoters actually intend to maintain a majority stake in the company.