Super Religare Laboratories (SRL), a unit of Fortis Healthcare, has announced its third private equity (PE) deal in the past 14 months. This time, NYLIM Jacob Ballas India Fund, a mid-market private equity firm with more than $600 million of funds under management and IFC, the investment arm of the World Bank, has put in Rs 370 crore ($66 mn) into the medical diagnostics firm. This takes the total PE investment in the company to Rs 970 crore ($173.6 million).
the funding by Jacob Ballas and . Earlier, SRL had raised $8.9 million (Rs 50 crore) from Sabre Capital in May 2011 and $17.9 million (Rs100 crore) from Avigo Capital Partners in April 2011. They are the first institutional investors into the company.
In the latest deal, SRL is issuing convertible preference shares (CCPS) in the price band of Rs 201-220 to Jacob and IFC, which will invest $44.75 milliom (Rs 250 crore) and $21.48 milliom (Rs120 crore) respectively. Post conversion of CCPS, the stake of Fortis Healthcare, which currently holds 71.5 per cent in SRL, will come down to 55-56 per cent, the company informed the stock exchanges.
The transaction is expected to be concluded this month itself. The amount raised from the deal will be utilised by SRL for repaying its debt, which the company had raised for acquiring Piramal Diagnostic Services Private Limited for $107.4 million (Rs600 crore) in 2010. The funds will also be used for consolidation and for expanding the operational network of SRL.
Vishal Bali, Group CEO, Fortis Healthcare Limited said, “This investment will go towards our consolidation strategy to improve market share and create sector leadership.”
The deal elicited a positive response on the Bombay Stock Exchange. Share of Fortis Healthcare ended up 0.89 per cent, or 0.90 points higher, at Rs 101.50. Religare Enterprises Limited stock ended up 1.8 percent at Rs 335.95.
SRL , a leading player in the medical diagnostics space in India, strengthened its position in the domestic diagnostic market, with its recent acquisition of Piramal Diagnostics.
SRL has a 10 percent share in the diagnostic market, estimated at $2 billion. Standalone centres and small regional players account for the rest. Lab Care Diagnostics (India) Private Limited, The Tulip Group, Canaan Partners Medical Diagnostics Company and Dr. Lal Path Labs are the other major players.
SRL provides pathology, radiology, wellness and clinical research services in 400 Indian cities and some overseas centres by means of 1,088 collection centres, 208 network laboratories, eight reference laboratories and 21 wellness centres as of March 31.
International business is carried out in Asia-Pacific, Africa and the Middle East.
The company has been through a series of transitions in its corporate structure and management since its inception in 1995. It commenced operations as a joint venture (JV) between Specialty Laboratories Asia Limited and Ranbaxy Laboratories Limited known as ‘Speciality – Ranbaxy Private Limited’. Thereafter, the JV was diluted and christened SRL Ranbaxy Limited. However, with the sale of majority stake in Ranbaxy by its promoters to Japanese pharmaceutical company Daiichi Sankyo in 2008, the company ceased to be known by its incepted brand (Ranbaxy) and attained its present name, SRL.
Some key deals in the pathology and wellness segment include TA Associates investment in Dr Lal Path Labs for $35mn in 2010, Greenfield Investments backing of Jawed Habib for an undisclosed sum in December 2010, Helion Venture Partners investment of $4 million in You Look Good in 2009 and CLSA Capital Partners’ $10 million investment in Vandana Luthra Curls and Curves (VLCC) in 2004.