PE-backed Aster DM Healthcare makes weak stock market debut
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Hospital operator Aster DM Healthcare Ltd, which is backed by private equity firms True North and Olympus Capital, made a weak start on the stock market on Monday, with its shares falling 4% from the issue price and moving lower.

Shares of Aster DM began trading on the BSE at Rs 182.10 apiece compared with the initial public offering (IPO) price of Rs 190, stock-exchange data showed. The stock traded between Rs 176.45 and Rs 187.80 before closing at Rs 179.85.

The BSE’s benchmark Sensex ended 0.9% higher while the BSE Healthcare index was little changed.

The company now commands a market capitalisation of Rs 9,086.51 crore, making it India’s second most-valued hospital firm behind Apollo Hospitals, but ahead of Fortis Healthcare and Narayana Hrudayalaya, which had gone public in early 2016.

Apollo Hospitals has a market cap of Rs 17,210 crore, while Fortis and Narayana command a value of Rs 8,278 and Rs 6,260 crore, respectively.

Aster DM is the fifth company to list on the main board of stock exchanges in 2018. All previous four companies had made a positive start on the bourses.

The weak start by Aster DM follows an IPO that managed to sail through on final day. The IPO was subscribed 1.3 times and saw marquee institutional investors participating in the public issue including UK-based First State Investments, which put in money with the backing of Canadian pension fund CDPQ, short for Caisse de dépôt et placement du Québec.

The company was seeking a valuation of about Rs 9,600 crore ($1.5 billion) at the upper end of the Rs 180-190 price band.

Aster DM had re-filed its draft IPO proposal with the Securities and Exchange Board of India on August 9 last year and received the regulator’s nod to float an IPO on October 27.

The company had postponed its earlier plan of going public as it had fallen short of the valuation it had desired. Its original plan had received SEBI’s approval in November 2016. It was earlier looking to mop up Rs 609-812 crore via a fresh issue of shares, VCCircle had reported.

However, the company trimmed its IPO size and ended up raising Rs 725 crore compared with the proposed Rs 775 crore at the time of filing its draft prospectus. The proceeds will be used to repay debt and buy medical equipment.

Private equity firms True North and Olympus Capital didn't sell any shares in the IPO even though their investments appear to have reached maturity.

True North had first backed the hospital firm in 2008. Olympus Capital entered in 2012. Both firms are sitting on multi-bagger returns on their bets in Aster DM.

Aster DM joins a clutch of pharmaceutical and healthcare companies that have been listed over the past couple of years. These include ChrysCapital-backed Eris Lifesciences, which floated its IPO in June last year.

Diagnostics companies Dr Lal PathLabs Ltd and Thyrocare Technologies Ltd, and hospital chains Narayana Health and Healthcare Global Enterprises Ltd, are among the other healthcare companies that have floated IPOs.

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