Oncology chain HealthCare Global’s IPO oversubscribed 55%

The initial public offering of HealthCare Global Enterprises Ltd (HCG) sailed through on Friday with 55 per cent oversubscription led by institutional investors. The issue, however, did not find too many takers among retail investors and HNIs and this was the weakest response for an IPO of a healthcare firm in the past one year.

One-fifth of the shares reserved for retail individual investors, and more than half of the shares kept for non-institutional investors, including HNIs and corporates, went unsubscribed.

The oversubscription was primarily driven by institutional buyers as they bid for 2.36 times their quota of 8.94 million shares reserved for them.

The issue had reached mid-way point on day 2 .

The operator of the cancer-care hospital chain has set the price band for the issue at Rs 205-218 a share and is targeting a valuation of up to Rs 1,854 crore ($276 million).

On Tuesday, the company raised Rs 292.3 crore ($43.4 million) from a bunch of anchor investors, including International Finance Corp and PE firm Sabre Partners.

The Bangalore-based company allotted 13.41 million shares at Rs 218 a share, the upper end of the price band, to about a dozen investors, including PE investors, mutual funds, insurance firms and other institutional investors.

IFC, the World Bank’s private-sector arm, subscribed to one-third of the anchor allotment portion for Rs 95 crore. Sabre Partners, which has morphed into a healthcare-focused PE firm, put in Rs 47 crore through two entities.

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

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

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

HCG was founded in 1998 and started expanding in 2006. Its IPO comes on the back of a string of spectacular listings in the past couple of months by hospital chain Narayana Hrudayalaya Pvt Ltd, diagnostics chain Dr Lal PathLabs Ltd, drugmaker Alkem Laboratories Ltd, Syngene International, the contract research organisation arm of Biocon.

While the IPO of Syngene was oversubscribed 31 times, IPOs of Dr Lal PathLabs, Alkem and Narayana Hrudayalaya were oversubscribed 32, 44.23 and 7.45 times, respectively.

Kotak Mahindra Capital, Edelweiss, Goldman Sachs, IDFC Securities, IIFL and YES Bank are the book managers for the HCG issue.

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