The company, which is 60% owned by TPG and Temasek, will hear IPO pitches from investment bankers this week, the people cited above said, adding they expect it to fetch a valuation of $1.8–2 billion.
“The IPO will be a mixture of primary and secondary fundraise, with investors TPG and Temasek likely to seek a partial exit,” one of the people cited above said on the condition of anonymity. “The final deal contours will be decided in a few months.”
“The parent is looking to list. A reverse merger with the subsidiary would not be equitable for all parties, but after the listing of the parent, the two entities will merge,” the person cited above added.
AHCL did not respond to queries, while Temasek and TPG declined to comment.
The hospital chain was founded by Dr Amar Agarwal as a single clinic in Chennai in 1957. Over the past few years, it set up chains across several states. While the parent company AHCL has a larger number of assets under its belt, the listed subsidiary AEHL has fewer.
AHCL operates in Maharashtra, Tamil Nadu, Punjab and Delhi, and holds over 71% in AEHL. AEHL owns some hospitals in Tamil Nadu, and has a market value of around ₹1360 crore on the BSE.
Between the parent and the subsidiary, the hospitals offer eye care services for cataract, laser correction, vitreo-retinal surgery, corneal transplant, glaucoma and squint. 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 its website.
In 2019, AHCL raised capital from Temasek. Over 2022 and 2023, TPG and Temasek put in more money. Following the last round in August 2023, its equity valuation stood at over ₹6,000 crore, group founder and chairman Amar Agarwal said in an interview with the Mint in August. Agarwal said the company plans to double its eye centres across India from around 150 clinics.
A Crisil credit rating report dated 6 September 2023 said the company’s financial risk profile has strengthened on the back of recent equity infusion from existing investors. “[T]he business performance continues to remain robust with steady and sustained stabilization of the recently added centres. Net worth would improve to over ₹1,200 crore by the end of the current fiscal (FY24) resulting in a sharp improvement in capital structure,” the report said.
The report added that equity raised by Dr Agarwals would help fuel medium term through greenfield expansion and acquisition.
“The group is estimated to grow at over 30% CAGR in the current fiscal while the growth would witness acceleration over the coming fiscals with the addition and scaling up of centres. The timely ramp up and stabilization of operations in the newly added centres would remain key rating monitorable,” the report said.
Dr Agarwals Health Care reported consolidated net sales of around ₹1,018 crore for FY23, on a profit of ₹103 crore, up from a revenue of ₹696 crore, on a profit of ₹43.1 crore, according to data platform VCCEdge. Several investors are opting to list their companies due to the rich multiples offered in the primary markets. The Sensex and the Nifty have both risen sharply over the last year —the Nifty is up over 22%, while the Sensex is up over 18% year-to-date.
“We remain structurally positive in the hospitals space and expect momentum to continue in FY24 with improvement in occupancy, better case- payor mix and new capacity additions,” said a research report on the hospital sector published by brokerage Prabhudas Lilladher dated 6 October 2023.
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Published: 05 Feb 2024, 11:03 PM IST