Kedaara Capital may invest in Vijaya Diagnostic

Local private equity firm Kedaara Capital may invest in Hyderabad-based diagnostics chain Vijaya Diagnostic Centre Pvt. Ltd, according to a report.

The development comes at a time when investor interest in the diagnostics sector is high following blockbuster IPO launches and listings of two companies from the sector in the past nine months.

The private equity firm may invest up to Rs 350 crore (around $52 million) for a significant minority stake, the Mint reported citing people aware of the development it didn’t name.

The transaction is will mostly be a secondary sale by promoters and will include a small primary component for the company's expansion, the report said. Investment bank Veda Corporate Advisors is the financial adviser to Vijaya Diagnostic, it added.

Kedaara, Vijaya Diagnostic and Veda didn’t respond to email queries till the time this article was filed.

Vijaya Diagnostic, founded by Surender Reddy in 1981, has 14 centres in Hyderabad. It also has centres in Kolkata, Chennai, Warangal and Nizamabad, according to its website.

The company reported net sales of Rs 100 crore in the year through March 2014 compared with Rs 81 crore the year before, according to VCCEdge, the data research platform of News Corp VCCircle. Its latest financials couldn’t be ascertained.

India’s diagnostics market is highly fragmented with organised players accounting for only 15%, according to a report by ratings firm CRISIL. According to the report, the industry is likely to grow at an average annual pace of 16-17% to Rs 60,100 crore by 2017-18 from Rs 37,700 crore in 2014-15.

In December 2015, Dr Lal Pathlabs made a spectacular listing on the bourses. The shares of the company are currently trading at Rs 1,229.90 apiece against their issue price of Rs 550. Private equity firms WestBridge Capital Partners and TA Associates partially exited during the IPO of the New Delhi-based company.

In April, investors also gave a thumbs-up to the IPO of diagnostics firm Thyrocare Technologies. The company's shares are trading at Rs 635.50 apiece against the issue price of Rs 446. Private equity firm CX Partners, which held 21% of the company, sold a 19% stake via the IPO.

Kedaara Capital investments

The PE firm was founded in 2011 by Manish Kejriwal, former India head of Singapore state investment fund Temasek; Sunish Sharma and Nishant Sharma, who were managing director and principal, respectively, of global private equity firm General Atlantic in India. Kedaara Capital had raised $540 million in its debut fund in November 2013.

It typically invests $25-75 million in each firm but it can invest a significantly larger amount of $200 million and above in select situations, according to its website.

The PE firm's portfolio include Mahindra Logistics, part of diversified conglomerate Mahindra Group, Mumbai-based carton manufacturer Parksons Packaging Ltd, Rajasthan-based non-banking finance company Au Financiers (India) Ltd, manufacturer of precision automotive components Bill Forge and rigid plastic packaging solutions provider Manjushree Technopack.

In the healthcare sector, the PE firm was close to acquiring RG Stone Urology Research Institute, a chain of urology and laparoscopy hospitals, from private equity firm India Equity Partners and its promoters, VCCircle reported in February.

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