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Aster DM IPO crosses one-fourth mark on first day
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The initial public offering of hospital chain Aster DM Healthcare Ltd crossed the one-fourths mark on the first day, Monday, led by institutional investors. The IPO will close on 15 February.

The public issue comprising 37.37 million shares, excluding anchor allotment, received bids for 9.44 million shares, stock exchange data showed. The book was subscribed 25.3% at the end of day one.

The qualified institutional buyers’ book was covered 50% of the 10.51 million shares reserved for them. The portion for non-institutional investors, comprising corporate bodies and wealthy investors, was subscribed 16.3%. Shares reserved for retail investors, whose application value cannot exceed Rs 2 lakh, received 15.3% bids.

Last Friday, Aster DM had raised Rs 294.04 crore ($45.68 million) from anchor investors. The investors included UK-based First State Investments, which put money with the backing of Canadian pension fund CDPQ, short for Caisse de dépôt et placement du Québec.

The company, started by non-resident Indian businessman Azad Moopen, allotted 15.47 million shares at the upper end of the Rs 180-190 price band to seven anchor investors, it said in a stock-exchange filing late on Friday.

First State Investments bought a little more than 2.5 million shares worth Rs 48 crore. It bought additional shares worth Rs 21.56 crore with the backing of CDPQ, exchange filings showed.

Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.

Other anchor investors include Hong Kong-based investment Karst Peak, Deutsche Bank’s Asia investment arm DB International Asia and Societe Generale.

Indian asset managers SBI Mutual Fund and Sundaram Mutual Fund had also participated in the anchor allotment.

Hospital operator Aster DM had re-filed its draft IPO proposal with the Securities and Exchange Board of India on 9 August. It received regulatory nod to float an IPO on 27 October.

The company had postponed its earlier plan of an IPO as it had fallen short of the valuation it had desired. Its original plan had received SEBI nod in November 2016. The company was earlier looking to mop up Rs 609-812 crore via a fresh issue of shares, VCCircle had reported.

At the upper end of the price band, the company is seeking a valuation of about Rs 9,600 crore ($1.5 billion). It will become India’s second most-valued hospital firm, behind Apollo Hospitals, but ahead of Fortis Healthcare and Narayana Hrudayalaya, which had gone public in early 2016.

The company has trimmed its IPO size and is now raising Rs 725 crore compared with the proposed Rs 775 crore at the time of filing its draft prospectus. The proceeds will be used to repay debt and buy medical equipment.

Private equity firms True North and Olympus Capital have decided to not sell any shares in the IPO even though their investments appear to have reached maturity.

True North had first backed the hospital firm in 2008. Olympus Capital came in 2012. Both firms are sitting on multi-bagger returns on their bets in Aster DM.

Aster DM will join a clutch of pharmaceutical and healthcare companies that have gone public over the past couple of years. These include ChrysCapital-backed Eris Lifesciences, which floated its IPO in June 2017. Diagnostics companies Dr Lal PathLabs Ltd and Thyrocare Technologies Ltd, and hospital chains Narayana Health and Healthcare Global Enterprises Ltd are among the other healthcare companies that have floated IPOs.

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