Hyderabad:The Krishna Institute of Medical Sciences Ltd (KIIMS), a Hyderabad based Super specialty is planning to become a public healthcare facility and is already talking to investment banks for an initial public offering.
According to two sources who refused to reveal their names to Deal Street Asia, the IPO plan could have the healthcare unit raise upto a valuation of Rs 600 crore. Talks have been underway for the same for the past few months. According to the two anonymous sources, “The management has been meeting with bankers over the last two-three months. They are planning an IPO, the size of which could be around Rs.500-600 crore, but they are yet to mandate banks for managing the process.” The IPO is expected be a calendar 2017 event according to them.
With interest growing in public issues of healthcare firms, the hospital’s share- sale plan comes at an appropriate time. Last years IPO collection of 21 firms amounted to Rs. 13,614 Crore; this year the figure from initial sales for nine firms being- Rs.5,941.7crore reported Deal Street Asia.
Since December last, four healthcare firms have approached the primary markets to raise money for expansion and help their private equity investors to move out. The four firms Dr Lal Pathlabs Ltd, Narayana Hrudayalaya Ltd, HealthCare Global Enterprises Ltd and Thyrocare Technologies Ltd in unison have raised almost Rs.2,375 crore. Apart from the share- sale of Healthcare Global, the other three IPOs also witnessed a strong demand from investors. The issues of Thyrocare, Dr Lal Pathlabs and Narayana Hrudayalaya were subscribed 73, 33 and 8 times, respectively.
Besides the above named, two other companies that have also decided to go public are : Aster DM Healthcare and New Delhi-based Centre for Sight.
A few healthcare facilities to choose from and limited penetration of quality healthcare units are the two reasons driving investors towards these acquisitions, say experts. “There is a shortage of healthcare infrastructure in the country. We are not only behind the western countries in terms of important standards such as bed-to-patient ratio, but also behind our neighboring countries. So, from a growth perspective, investors can see a long-term demand visibility and, hence, any well-managed hospital asset will see interest from investors,” says Hitesh Sharma, partner and national leader-life sciences at auditing and consulting firm EY.
The healthcare service sector’s projected market size predictions are going to be $280 billion by 2020, according to the FICCI and KPMG report; the growth path in all likelihood will be dominated by the private sector, which happens to constitute 70% of outpatient and 60% of inpatient services, according to FICCI.
In the face of limited healthcare companies to choose from , demand seems to be growing incessantly. KIMS, which was started in 1996, today has almost 1,800 beds across five super-specialty hospitals in the states of Telangana and Andhra Pradesh reported Sharma. Hyderabad, Nellore, Kondapur, Rajahmundry and Srikakulam being the cities of location for the five other hospitals.
ICICI Venture, a private equity firm and an investor in KIMS Hospitals, will analyze the selling part of its stake in the company through the public offer, said the source, requesting anonymity again.
Holding a 28% stake as of 31st March,2015, the ICICI venture had picked up this fund in 2014 by investing around Rs.220 crore. The company refused to comment on the same when contacted. Calls to Dr B. Bhaskar Rao, Managing Director and Chief Executive of KIMS Hospitals, got no answers either. This will be the 3rd IPO venture for the ICICI, in recent times.The earlier one being that of Teamlease services, which helped the company raise Rs. 423Crore , Adlab Entertainments ltd also listed on the stock exchange in 2015.
The primary objective of the IPO is to raise capital to fund the hospital chain’s operations and growth plans, the sources explained “They are looking at raising the money to fund organic growth and to invest in technology,” they further added.
KIMS Hospitals’ revenue grew to Rs.409.6 crore in financial year 2014-15, from Rs.353.6 crore the previous year. The hospital chain reported a profit of Rs.11.4 crore in 2014-15, compared with Rs.6.8 crore the previous year, according to the company’s filings with the registrar of companies,