Dr Agarwals Healthcare, the parent of listed firm Dr Agarwals Eye Hospital, has engaged five investment banks as advisors and kicked off the process to launch an initial public offer and raise around Rs 3,000 crore in FY25, multiple industry sources in the know told Moneycontrol.
The firm, which is backed by marque investors Temasek and TPG Growth, holds a 71.75 percent stake in subsidiary Dr Agarwals Eye Hospitals that was incorporated back in 1994.
"The deal was kicked off recently and Kotak Mahindra Capital, Jefferies, BofA Securities, Morgan Stanley and Motilal Oswal Financial Services have been selected as part of the IPO syndicate. The quantum hasn't been finalized yet and could vary later depending on market conditions, but the plan is to mop up around Rs 3,000 crore," said one of the persons above.
The move comes at a time when the Nifty Healthcare Index has risen by 58 percent in the last one year and if the firms plans fructify, it would be the biggest IPO by a healthcare/ hospital chain since Dr Naresh Trehan-backed Global Health Ltd (the operator of Medanta Hospitals) raised around Rs 2,200 crore via an IPO in late 2022.
A second person told Moneycontrol, "The intention is to unlock value from the larger, unlisted parent and a listing is a good way to get in fresh investors and also provide a partial exit window to the PE players. The proposed IPO will be a combination of primary and secondary issue of shares and Dr Agarwals Healthcare is looking to rapidly expand its network and invest in technological advancements."
"Both businesses (Dr Agarwals Health Care and Dr Agarwals Eye Hospitals) have grown fairly well over the years and differ in formats and geographical slicing. The stakeholders have evaluated all options, and it makes sense to do the price discovery afresh since there is a good appetite for healthcare assets. At a later stage, it is open to both the entities to explore a merger," a third person familiar with the group and its listing plans said.
A fourth person also confirmed that Dr Agarwals Health Care had engaged advisors and initiated work on a listing.
All the four persons above spoke to Moneycontrol on the condition of anonymity.
Email queries sent to Dr Agarwals Healthcare, Dr Agarwals Eye Hospitals and Dr Adil Agarwal, CEO, Dr Agarwals Eye Hospitals were left unanswered at the time of publishing this article. A text message sent to Dr Adil Agarwal was also left unanswered.
The investment banks couldn't be reached for an immediate comment. This article will be updated as soon as we hear from all the parties. Temasek and TPG declined to comment.
TPG, Temasek have an 'eye' for healthcare
Singapore investment giant Temasek and US private equity firm TPG Growth collectively hold a majority stake of around 60 percent in Dr Agarwals Health Care.
In August 2023, the firm raised Rs 650 crore from both firms at a valuation of Rs 6,000 crore according to Dr Amar Agarwal, Chairman, Dr Agarwals Eye Hospitals Group. When the fund infusion was announced, the stated aim was to double the network to 300 clinics from 150 clinics majorly via the inorganic route.
The firm is also looking to expand its footprint in the African market. Reports have pegged its FY23 consolidated net sales at Rs 1,018 crore (vs Rs 696 crore a year earlier) with a profit of Rs 103 crore (vs Rs 43 crore a year earlier)
In May 2022, the firm raised over Rs 1,000 crore in funding from TPG Growth and Temasek, in one of the largest fundraisings in the eye care segment.
At the end of day's trade on March 13, Dr Agarwals Eye Hospitals had a market cap of Rs 1,413 crore. The firm's stock has risen by nearly 30 percent in the last six months. According to BSE data, it started trading nearly three decades back on April 21, 1995.
Dr Agarwals Group of Eye Hospitals started as a single facility in Chennai in the year 1957. As per the website, the group is led by Chairman Prof. (Dr.) Amar Agarwal, a pioneer in the field of eye care.
As of August 2023, Dr Agarwals Eye Hospitals had a total network presence of 151 centres (140 hospitals and 11 eye clinics) spread across India and Africa. The group’s presence spans across 10 countries and over 14 states in India. Its facilities are staffed by a team of over 500 ophthalmologists and 3,500 employees. They have treated over 15 million patients so far and offer not only eye care but also academic and research programs in ophthalmology and related fields.
The group offers eye care services such as cataract, laser correction, vitreo-retinal surgery, corneal transplantation, glaucoma and squint at its centres. In addition to this, super-speciality eye care services such as paediatric ophthalmology, ocular oncology, neuro-ophthalmology, uvea and oculoplasty are also offered at its tertiary hubs, according to the website.
D-street debuts by hospital chains
Earlier on March 13, Moneycontrol reported that Creador-backed Paras Healthcare has opted to switch to the IPO route after the private equity firm initially explored an exit via a stake sale.
Three hospital chains have listed on the domestic bourses in the last year, namely, West Bengal and Tripura-focused GPT Healthcare, Thane, Maharashtra-headquartered Jupiter Life Line Hospitals and Noida-based Yatharth Hospitals.
On March 11, Moneycontrol reported that Temasek and billionaire Dr Ranjan Pai-backed, IPO-bound Manipal Hospitals had entered the final stage of a proposed buyout of East -focused hospital chain Medica Synergie.
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