Entero Healthcare Solutions Ltd. (Entero), a healthcare products distributor, is planning to raise ₹1,000 crore through a fresh issue and offering 85 lakh share through Offer for Sale (OFS) for selling shareholder via an initial public offering (IPO).
The company intends to supplement its organic growth with acquisitions of regional and local distributors with strong branding, market position and growth potential in markets where it either does not have a presence or intends to consolidate market share, MD & CEO Prabhat Agrawal said in an interview.
“Since our inception in 2018, we have acquired 32 entities in the healthcare products distribution industry. Through the acquisitions, we plan to replicate the success we have had in our key operating cities such as Bengaluru, Mumbai, Delhi National Capital Region, Cochin and Vizag,” he said.
Market consolidation is expected in India’s pharmaceutical distribution market, as per Crisil report.
Of the ₹1,000 crore an amount of Rs. 124 crore would go towards debt repayment by the company and its subsidiaries; and ₹600 crore for funding the long term working capital requirements; and the rest towards general corporate purposes.
As part of its strategy, Entero is seeking to increase customer base through the addition of new pharmacies, hospitals and clinics in both existing and new territories, its CEO said.
It aims to expand geographic reach through a “hub and spoke” model which connects warehouses and supply points across districts.
“We intend to grow sales through our existing distribution network, taking advantage of the low penetration of scaled up and efficient healthcare products distribution platforms and strengthen our market position,” Mr. Agrawal added.
On the proposed acquisitions he said, “When evaluating acquisition targets, we takes into account a number of factors such as the size of the market where the target company operates, their customer base and catchment area, supplier relationships, product portfolio, synergies with our existing network, historic financial performance and future opportunities for growth.”
The company is among the top three healthcare products distributors in India in terms of revenue in FY22, and reported an operating income of ₹2,522.07 crore in FY22 and total income of ₹3,306 crore in FY23 (consolidated) and EBITDA of ₹64 crore in FY23.