Hospital chain Paras Healthcare plans Rs 1,000 crore IPO; PE firm Creador to exit

In the last six months, the Indian stock markets have seen the IPOs of two hospital chains.

North India-focused hospital chain Paras Healthcare Private Ltd has initiated talks with investment banks and lawyers for an initial public offering (IPO) of the company, sources told Moneycontrol.

The proposed IPO is likely to be worth around Rs 1,000 crore in size, the sources said. They added that a majority of the IPO, around Rs 800 crore, will include a secondary sale of shares by existing shareholders of the hospital chain, particularly Creador, a South and Southeast Asia focused private equity fund.

“The IPO is primarily aimed at providing an exit to Creador and hence a substantial portion of the deal will be secondary. Creador is likely to sell its entire stake in the IPO. A small portion of primary capital will be raised to fund expansion plans of the hospital chain,” one of the sources cited above told Moneycontrol on the condition of anonymity.

“The company has met several investment banks in the last couple of weeks to discuss its IPO plans,” he added.

The company may fetch a valuation of around Rs 3,500-4,000 crore or more for the IPO, the sources said, although they cautioned that since these are early days, the valuation numbers and structure of the deal could change as the company firms up its plans in the coming months.

Creador invested Rs 275 crore Paras in 2017 and holds close to 25 percent stake in the company.

The hospital chain’s IPO plans follow an earlier attempt by the PE fund to sell its stake. Moneycontrol reported in May 2023 that Creador had appointed an investment bank to seek buyers for its stake in Paras.

Also Read: Paras Healthcare: PE firm Creador revives plans to exit, appoints o3 Capital

Paras Healthcare and Creador did not respond to emails seeking comment on the matter till press time. The copy will be updated with the comments from the parties when they respond.

North India-focused hospital chain

The hospital chain started its first facility in Gurugram back in 2006. Currently, it manages a portfolio of seven multi-super specialty hospitals under the brand name 'Paras Health’ with 1,700 beds.

Among these, two hospitals are situated in Haryana, two in Bihar, one in Rajasthan, one in Jharkhand, and one in Jammu & Kashmir, with plans for expansion into Uttar Pradesh.

Paras Healthcare's consolidated operating revenue increased 17 percent to Rs 918 crore in FY23, compared to Rs 780 crore in FY22, according to a report by credit rating agency Care Ratings.

The chain predominantly derived revenue from critical therapeutic segments, including Cancer care (approximately 17 percent of total gross revenue for FY23), Orthopedics & joint replacement (around 14 percent), Cardiology (approximately 11 percent), and Neurosurgery (about 9 percent), the Care Ratings report said.

These segments collectively contributed 52 percent of gross revenue during FY23 (compared to 48 percent in the previous year), with the remaining revenue sourced from other segments like Neurology, Nephrology, Gastroenterology & GI surgery, Cardiac surgery, and Urology, among others.

Hospital IPOs

In the last six months, the Indian stock markets have seen the IPOs of two hospital chains.

Eastern Indian focused GPT Healthcare raised Rs525 crore in its IPO in February, while Western India focused Jupiter Life Line Hospitals raised Rs542 crore in its September IPO.

Earlier in July, Noida-based Yatharth Hospital & Trauma Care Services Ltd raised Rs686 crore through its IPO.

In November 2022, Dr Naresh Trehan led Medanta Hospital’s parent company Global Health Ltd raised Rs2,206 crore through an IPO.