Pathology chain Metropolis Healthcare Ltd, which went public last year, will acquire a majority stake in another diagnostics firm in Gujarat as it seeks to strengthen its presence in the western region.
Metropolis said in a stock exchange filing that it will buy a 51% stake in Shraddha Diagnostic Centre (I) Pvt. Ltd for Rs 9.36 crore ($1.3 million at current exchange rate) in an all-cash deal.
The transaction, which has been approved by its board of directors, is expected within three months, it said. No government approvals are required for the deal, it added.
Shraddha Diagnostic, which was established in 2000, is engaged in the business of providing pathological and diagnostic services. Its team consists of Dushyant Patel, Hiren Shah and Hardik Murabiya, according to its website.
The company reported a turnover of Rs 2.44 crore for the year ended March 2019 as compared with Rs 34 lakh the previous year.
In April last year, Metropolis became the third diagnostics chain to list after Dr Lal PathLabs Ltd in late 2015 and Thyrocare Technologies Ltd in 2016.
Later in 2019, the pathology chain acquired four labs to strengthen its presence in Surat, Gujarat for a total of Rs 18 crore ($2.53 million) in cash.
Metropolis had, in 2017, acquired Gujarat-based Sanjeevani Pathology Laboratory to strengthen its presence in the western region.
The firm, which started as a single lab in the 1980s, received its first external funding of Rs 35 crore from private equity firm ICICI Venture in 2005. This was followed by $85 million from PE firm Warburg Pincus, providing an exit to ICICI Venture. In 2015, the founding Shah family bought the 27% stake of Warburg Pincus for Rs 550 crore with the backing of KKR India. Later in 2015, the company brought marquee investor Carlyle on board when the PE firm bought co-promoter GSK Velu's stake in a controversial board battle.
The pathology chain operates in 19 states in India with strong footprints in the western and southern regions. It offers a range of clinical tests used to diagnose a range of illnesses.
The company follows a hub-and-spoke model. It had a network of 115 clinical labs, 1,631 patient touch points, about 9,000 pick-up points and 552 assisted referral centres as on 31 December 2018.
Outside India, the firm has laboratory operations in Ghana, Kenya, Zambia, Mauritius and Sri Lanka. In addition, the company has entered into agreements with third parties to collect and process samples in Nepal, Nigeria, the UAE and Oman.