International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, is investing up to $30 million into Avigo Capital and Sabre Capital-backed diagnostics firm Super Religare Laboratories (SRL), at least two sources with the direct knowledge of the development told VCCircle. The company is raising money primarily to fuel its inorganic growth.

Sources add that IFC is currently at the final stages of concluding the investment into the company, which received interest from a dozen private equity firms including Jacob Ballas Capital, Olympus Capital, Q-Investments and GE Healthcare, among others, for its third round of capital raising in less than a year.

Separate email queries sent to the respective spokespersons of Super Religare Laboratories and IFC did not elicit any response till the time of writing this article.

Sources add that the current round of funding is happening at a significant mark-up over the first round of institutional funding raised by the company. In April last year, Avigo Capital, a mid-market private equity fund, acquired 9.27 per cent of the post-investment equity share capital of the company for Rs 100 crore.

Two weeks later, Sabre Capital put Rs 50 crore in the diagnostics firm at Rs 203 per share, as against Rs 188 a piece at which Avigo invested.

Currently, the company is working with annualised revenues close to Rs 600 crore.

Two years ago, SRL acquired Piramal Diagnostic Services Pvt Ltd for $128 million to strengthen its presence in the radiology services that also made it the biggest diagnostics chain in the country, ahead of firms like Dr Lal Pathlabs.

Billionaire brothers Malvinder and Shivinder Singh, the promoters of SRL, recently sold their 86 per cent stake in SRL to the listed Fortis Healthcare (India). Fortis Healthcare acquired 74.59 per cent, held by the promoters in SRL, for Rs 803 crore.

Given the series of shareholding changes, SRL was reportedly asked to refile the documents for its proposed public issue and the issue had been pushed back. SRL had plans to use a portion of the proceeds of the public issue to repay/retire liabilities from the Piramal acquisition, as also the debt on its own book. The proposed PE funding is likely to take care of immediate funding needs.

As of December 31, 2010, SRL’s diagnostic laboratory network comprised eight reference laboratories, seven centres of excellence, 181 network laboratories (comprising 164 pathology and 17 radiology labs), 15 wellness centres and 888 collection centres. Out of the 164 pathology laboratories, 53 are owned by SRL, 31 are managed by it (including 14 based in hospitals run by the group firm Fortis Healthcare Ltd), 55 are joint venture labs and 25 are franchisee labs.

Of its 17 radiology laboratories, 16 are owned by SRL, and it operates and manages one radiology laboratory based in a hospital. Six of its reference laboratories are based in India, with the seventh reference laboratory located in Kathmandu, Nepal. It has entered into a service agreement for one reference laboratory in Dubai Healthcare City.

The pathology market is currently 2.5 per cent of the overall healthcare delivery market. There are 40,000 independent path labs in the country and the industry is highly competitive and price-driven. Also, around 70 per cent of treatment decisions in the country are based on lab results. Indian healthcare industry is a $35 billion market, projected to grow at 15 per cent per annum.

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