Choice Equity Broking IPO report on Global Health
Global Health Ltd. (Global Health), which operates and manages hospitals under the “Medanta” brand, is coming up with an IPO to raise around Rs. 2,200cr, which opens on 3rd Nov. and closes on 7th Nov. 2022. The price band is Rs. 319 - 336 per share. The IPO is a combination of fresh issue and OFS portion. Global Health will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs. 375cr will be invested in its subsidiaries, which in turn will utilize the fund for the prepayment/repayment of debt. Residual funds will be used for general corporate purposes. One of the selling investors i.e. Anant Investments (an affiliate of Carlyle Group) held 25.66% stake in the company. On 20th Oct. 2022, it entered into a share purchase agreement to offload 1.434cr shares (representing 5.66% of the pre-IPO equity share capital) at Rs. 336 per share to RJ Corp Ltd. (one of the existing investor in Global Health with 3.95% stake); and to two new investors i.e. SBI Mutual Fund and Novo Holdings A/S. Pursuant to the agreement, Anant Investments’s pre-IPO stake in Global Health will come down to 20%, while RJ Corp Ltd.’s stake will increase to 5.83%. SBI Mutual Fund and Novo Holdings A/S each will have 1.89% stake in the company. Through this IPO, Anant Investments will fully offload its residual stake in Global Health.
Valuation and Outlook
At higher price band, Global Health is demanding an EV/Sales multiple of 4x, which is lower than the peer average. Thus the IPO is attractively priced. Considering the strong long term structural factors and the anticipated business growth of the company we assign a “SUBSCRIBE” rating for the issue.
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