Entero Healthcare Solutions files for IPO, fresh issue component at Rs 1,000 crore

Entero Healthcare Solutions files IPO papers

Healthcare products distributor Entero Healthcare Solutions, backed by OrbiMed, has filed draft red herring prospectus with the capital markets regulator SEBI on September 13.

The initial public offering comprises a fresh issuance of shares worth Rs 1,000 crore by the company, and an offer-for-sale (OFS) of 85.57 lakh equity shares by 19 selling shareholders including promoters Prabhat Agrawal, OrbiMed Asia III Mauritius, and Prem Sethi.

Corporate promoter OrbiMed Asia III Mauritius, owned by the US-based healthcare-focussed investment firm OrbiMed, has 58.70 percent shareholding in the company, while individual promoters Prabhat Agrawal and Prem Sethi hold 11.38 percent and 6.46 percent shares in the company.

Prasid Uno Family Trust (through trustees Surbhi Singh and Universal Trustee) is the second largest shareholder in the company, owning 20.04 percent stake.

The Mumbai-headquartered company may consider a fund raising of Rs 200 crore via private placement, preferential allotment or rights issue, before the filing of the red herring prospectus with the ROC.

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The net fresh issue proceeds will be utilised by the company mainly for repaying debts amounting to Rs 123.7 crore, and long-term working capital requirements of Rs 600 crore. The remaining funds will be used for inorganic growth initiatives through acquisitions, and general corporate purposes.

OrbiMed-backed and founded in 2018 by Prabhat Agrawal & Prem Sethi, Entero Healthcare claims to be amongst the top three healthcare products distributors in India in terms of revenue in FY22 and reported an operating income of Rs 2,522.07 crore in FY23.

The pharmaceutical and medical device distributor with a customer base of retail pharmacies and hospitals has a pan-India network of 73 warehouses, and technology infrastructure. During the fiscal 2023, it catered to over 81,400 retail customers and over 3,400 hospital customers, increasing sharply from 64,200 retail customers and 2,500 hospital customers in FY22.

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Also, it has a supply relationship with over 1,900 healthcare product manufacturers that gives access to over 64,500 product stock keeping units (SKUs).

As per the financials reported in the past fiscals, Entero Healthcare has been a loss-making entity, with a net loss of Rs 11.1 crore for the year ended March FY23, which narrowed from loss of Rs 29.44 crore, but revenue growth was robust, rising 31 percent on-year to Rs 3,300 crore during FY23.

ICICI Securities, DAM Capital Advisors, Jefferies India, JM Financial, and SBI Capital Markets are the merchant bankers to the issue.