IFC, Sabre Partners come as anchor investors in oncology chain HCG

Bangalore-based HealthCare Global Enterprises Ltd (HCG) has raised Rs 292.3 crore ($43.4 million) from a bunch of anchor investors, including International Finance Corp and PE firm Sabre Partners, ahead of its initial public offer (IPO).

The cancer treatment hospital chain allotted 13.41 million shares at Rs 218 per equity share, the upper end of price band, to a dozen odd investors, including a bunch of PE investors, mutual funds, insurance firms and other institutional investors.

One-third of the anchor allotment portion was subscribed by IFC, which put in Rs 95 crore, while Sabre Partners that has morphed into a healthcare focused PE firm put in Rs 47 crore through two entities.

Other anchor investors include HDFC Standard Life Insurance, Reliance Life Insurance and a portfolio investment unit under Citigroup.

Early last week, HCG set the price band for its public issue that opens on March 16, eyeing a valuation of Rs 1,854 crore ($276 million).

The cancer treatment hospital chain, which had filed its draft red herring prospectus (DRHP) with securities market regulator SEBI in July last year, has priced the offer in the band of Rs 205-218 per share.

The overall issue (including anchor allotment portion) comprises a fresh issue of up to 1.16 crore equity shares and an offer for sale of up to 1.82 crore shares by its existing shareholders. The IPO will close on March 18.

The offer would constitute up to 35.03 per cent of the company's post-offer paid-up equity share capital.

Given the anchor allotment, the remaining public issue size now stands at Rs 357 crore at the upper end of the price band.

HCG had roped in a string of PE firms to back it over the years and has previously given exits to two of them—IDFC Alternatives and India Life Sciences Fund.

Among the existing investors, PremjiInvest, India Build Out Fund (now under Quadria Capital) and Temasek have offered to sell shares in the IPO.

While PremjiInvest and India Build Out Fund are looking to sell half of their holding, Temasek, which invested in the company just two years ago, had offered to sell a quarter of its stake. 

Kotak Mahindra Capital, Edelweiss, Goldman Sachs, IDFC Securities, IIFL and Yes Bank are the book managers to the issue.

Founded in 1998, HealthCare Global Enterprises provides specialty healthcare in India focused on cancer and fertility under the brand HCG. It started expanding operations in 2006.

The Indian IPO market rebounded strongly last year and a string of healthcare firms either launched, filed or got SEBI's approval for the IPO.

Early in January, Narayana Hrudayalaya Pvt Ltd, the country's second-largest hospital chain by the number of operational beds, made a strong stock market debut. Prior to Narayana Hrudayalaya, diagnostics chain Dr Lal PathLabs Ltd and drugmaker Alkem Laboratories Ltd also made spectacular stock market debuts.

Thyrocare Technologies Ltd, India's largest thyroid testing company, and single-specialty firm Centre For Sight recently got SEBI's nod for IPOs.

PE investors

Meanwhile, for IFC, this adds to a list of healthcare service firms it has backed. It has invested in eye-care firm Eye-Q Vision, dialysis chain NephroPlus, home healthcare firm Portea besides Global Hospitals and the country's second-largest hospital chain Fortis Healthcare as well as its diagnostics chain business SRL. It is also an investor in another large corporate hospital chain Max Hospitals. IFC was previously also an investor in Apollo Hospitals.

Indeed in some of these firms, it had co-invested with Sabre Partners.

For Sabre Partners, this is the first new investment in almost two years. Its last deal was in July 2014 when it invested in Vyome Biosciences, as per VCCEdge, the data research platform of VCCircle.

As first reported by VCCircle, the India-focused mid-market private equity firm was on the road to raise its fourth fund with a target corpus of $100 million.

This fund specifically focuses on the healthcare sector, which would be in line with its recent investment strategy in the country.

The PE firm's first fund was focused on financial services and had a corpus of $100 million. Sabre Partners' second fund of $100 million was raised in 2006 and it focused specifically on infrastructure. The third fund, which was raised in 2009, was smaller in size ($50 million) and focused on healthcare.

Sabre Partners—whose best known investment to date has been Centurion Bank, which was subsequently acquired by HDFC Bank—is also looking to exit some of its past investments. Last September, Fortis Healthcare had said it will increase its stake in the country's largest pathology chain SRL by purchasing shares from Sabre Partners and its related entities.

It had said that it will buy shares representing a 3.1 per cent stake in SRL for Rs 105.2 crore ($16 million). Sabre Partners was to exit its four-year old investment in SRL, formerly known as Super Religare Laboratories, completely through this transaction.

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