Centre for sight, files for IPO

In last couple of months, we have seen a lot of healthcare business entering into capital market to raise funds; and this is likely to continue for a while. Recently New Delhi based Centre For Sight, one of the established names in the eye-care specialty chain, has filed its Draft Red Herring Prospectus (DHRP)with the capital markets regulator - Securities and Exchange Board of India (SEBI), for its maiden capital market foray.

Founded by Dr Mahipal Singh Sachdev, who holds a Bachelor’s degree in Medicine and Surgery; and a Doctor of Medicine degree in ophthalmology (“MD”), both from the All India Institute of Medical Sciences, Centre For Sight offers a comprehensive suite of diagnostic and surgical eye care procedures, serving patients across all age groups. The company’s primary focus is on premium ophthalmic surgeries supported by advanced technology not only for cataract and Laser in Situ Keratomileusis (“LASIK”) procedures, including Small Incision Lenticule Extraction (“SMILE”) [TM] technology (a laser surgery for refractive error correction), but also for niche eye care procedures, such as for ocular oncology;and for vitreoretinal surgeries; glaucoma; and ophthalmoplastic procedures.

According to a CRISIL Report, it is estimated that the addressable market for eye care service providers in India is to be of the order of Rs 158 billion in 2014-2015, which is expected to double over the next five years, reaching Rs 283 billion in 2019-2020. In comparison with other healthcare delivery models, including other single specialty healthcare services as well as multi-specialty healthcare services, the report further estimates that eye care generates the highest returns in India.

Based on the health indicators for India released by the World Health Organisation's 'World Health Statistics survey'⅞, CRISIL Research estimates the size of the Indian healthcare delivery industry at Rs 3.8 trillion in value terms as of 2014-2015. While the in-patient department (the “IPD”) accounted for 81% of the healthcare delivery industry; the out-patient department (the “OPD”) accounted for the remaining 19%. CRISIL Research defines outpatients as patients who are not required to stay at the hospital overnight. It includes consultancy, day surgeries and diagnostics; and excludes pharmaceuticals purchased from standalone outlets.

It is expected that the healthcare delivery market will grow at a CAGR of 12% and reach Rs 6.8 trillion by 2019-2020. CRISIL Research believes that apart from a change in age demographics and rising incomes; improvement in health awareness, changes in the disease profile (towards life-related ailments), rising penetration of health insurance and increasing opportunities from medical tourism will propel demand for healthcare facilities in India. Expansion plans by major private players are expected to be skewed towards illnesses related to the IPD; and hence, the share of IPD by value is expected to increase from 81% in 2014-2015 to 83% in 2019-2020. Supply-side growth drivers include expansion of medical infrastructure; burgeoning private sector, and private equity investments.

The Initial Public Offer would comprise a fresh issue of shares to raise about Rs 115 crore; and an offer for sale of upto 2.54 million shares by existing shareholders - Mahipal Singh Sachdev, Ritika Sachdev, Dinesh Talvar, Lalit Verma, Alka Sachdev and Matrix Partners India.

The proceeds of the issue will be used for constructing a super-speciality eye care centre at Dwarka based out of Delhi; pre-payment of some loans availed for the development of the Dwarka centre; and also to set up six new eye care centers.