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Hospital chain Narayana Health files for IPO

06 October, 2015

Narayana Hrudayalaya Pvt Ltd, which operates a chain of multi-specialty and super specialty hospitals in the country under the brand name of Narayana Health (formerly Narayana Hrudayalaya) – has filed draft herring prospectus with the capital markets regulator Securities and Exchange Board of India for its initial public offer.

The proposed public issue will see Narayana Health’s existing shareholders—Pinebridge (formerly AIG Capital) and JPMorgan Partners—besides its promoters sell stake.

It is the second hospital chain to file documents for IPO. In July, Bangalore-based HealthCare Global Enterprises Ltd (HCG), one of the leading cancer treatment hospital chains in the country, had filed documents for its IPO.

Others like Aster DM Healthcare has previously said it is finalising its plans for its maiden public issue, but is yet to make a formal move.

VCCircle had first reported that the firm has kick-started the work on its IPO.

Currently there are two large public listed hospital chains: Apollo Hospitals Enterprise and Fortis Healthcare. Max Hospital, which is currently housed under Max India, is being demerged into a separate firm as part of a corporate restructuring in which it would be listed as a healthcare and health insurance company.

Last December, Narayana Health had raised Rs 200 crore in a fresh PE funding round from UK-based development finance institution CDC Group Plc. This deal valued the firm at Rs 3,400 crore ($535 million then).

Here’s a snapshot of the IPO

* IPO comprises sale of 20.4 million equity shares, a fifth of which is by the promoters Shetty family and the rest equally split between JPMorgan Partners and Pinebridge.

* Bankers: Axis Capital, IDFC Securities and Jefferies.

* Since the entire issue comprises an offer-for-sale, the company would not receive any money and the entire money will go to its selling shareholders.

Company

* Founded by cardiologist Devi Shetty in 2000, Narayana Health started with a 300-bed hospital and now has grown to become India’s third-largest hospital with 5,600 operational beds and the potential to reach a capacity of up to 6,600 beds.

* Headquartered in Bangalore, the healthcare company has a network of 23 hospitals (multispecialty and super-specialty healthcare facilities which provide tertiary care), eight heart centres (super-specialty units which are set up in third party hospitals) and 25 primary care facilities (including clinics and information centres), across 32 cities, towns and villages in India.

* In financial year 2015, these facilities served over 1.97 million patients.

* The company operates through a combination of hospitals that it operates and own; hospitals and heart centres that it operates and pay a revenue share to the owner of the hospital premises; hospitals, standalone clinics and primary care facilities that it operates on a lease or licence basis and hospital management services that it offers to third parties for a management fee.

* As of July 31, 2015, the company had 11,478 employees and students, including 818 doctors, 5,438 nurses, 2,009, paramedical staff, and engaged the services of an additional 1,660 doctors on a consultancy basis (including visiting consultants).

Financials

* For the year ended on March 31, 2015, the company clocked a revenue from operations of Rs 1,363 crore, EBITDA of Rs 137 crore, and net loss of Rs 10.8 crore. While the firm’s revenues rose 24.5 per cent last year, its EBITDA slipped 3.9 per cent. The firm had posted net profit of Rs 31.7 core in the previous year. The losses are from units that are not fully controlled by it.

Investors

* Pinebridge owns 11.22 per cent stake with JPMorgan Partners holding 10.91 per cent and CDC Group owning5.88 per cent. Both Pinebridge and JPMorgan Partners, who had invested Rs 200 crore each in 2008, have offered to sell under half of their holding in the IPO.

* Biocon’s chairman and managing director Kiran Mazumdar Shaw also owns 2.35 per cent stake in the hospital chain.


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Hospital chain Narayana Health files for IPO

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