HealthCare Global sets IPO price band at Rs 205-218; Issue to open on March 16

Health Care Global, India’s leading provider of cancer care treatment in India is set to go public in the coming week, in what could be another speciality healthcare provider hitting the capital markets in a span of a few months.

Issue Snapshot

Speciality healthcare provider focused on cancer and fertility, Health Care Global (HCG), which is backed by Premji Investment Opportunities Fund (PIOF), the investment arm of Wipro Group chairman Azim Premji, is planning to raise funds through fresh issue of shares, besides an Offer For Sale (OFS). Total 29.8 million equity shares are on offer by promoters and other major investors like IL&FS Trust & PIOF. Company will not receive any proceeds from the OFS. The offer would constitute upto 35.03% of the company’s post-offer paid-up equity share capital. The offer is expected to hit the markets from March 16, 2016 to March 18, 2016, with a price band of Rs. 205 – Rs. 218 per equity share of face value of Rs. 10 each. The Anchor Investors (the first investors in any round, that provide subsequent investors a degree of confidence), shall bid one working day prior to the Bid/Offer Opening Date i.e. on Tuesday, March 15, 2016. Since the new issue size is more than Rs 500 crore, the company is subject to a monitoring process by an independent agency under SEBI regulations. Kotak Mahindra Capital, Edelweiss Financial, Goldman Sachs India Securities, IDFC Securities, IIFL Holdings and Yes Bank are the Book Running Lead Managers while Karvy Computershare is the Registrar to Offer.

Company Profile

Founded by Dr. Kamini Rao, HCG is a provider of speciality healthcare in India focused on cancer and fertility. Under the “HCG” brand, company operates the largest cancer care network in India in terms of the total number of private cancer treatment centres licensed by the AERB as of May 31, 2015. Under the “Milann” brand, HCG operates their fertility centres. As of December 31, 2015, HCG network consisted of 14 comprehensive cancer centres, including centre of excellence in Bengaluru; three freestanding diagnostic centres; and one-day care chemotherapy centre, all of which are spread across India. HCG network operates on a “hub and spoke” model, wherein HCG centre of excellence in Bengaluru serves as a “hub” to other cancer centres. In HCG network, company’s specialist physicians adopt a technology-focused approach to diagnosis and treatment. As of December 31, 2015, the network also had 12 HCG comprehensive cancer care centres under various stages of development in India. Parent company’s subsidiary, HCG Africa, which has been formed to establish a network of comprehensive cancer care centres in Africa,  gives it a foreign presence too.

Utilization of IPO Funds

According to the HCG’s DRHP (Draft Red Herring Prospectus), HCG intends to use the IPO proceeds of the fresh issue towards; (i) Purchase of medical equipment, (ii) Investment in IT software, services and hardware, (iii) Pre-payment of debt and (iv) General corporate purposes.

Financials

On a consolidated basis, HCG's revenue from operations for the six months ended September 30, 2015 and Fiscal Years 2015; 2014; and 2013 stands at Rs 2,854.29 million; Rs 5,193.75 million; Rs 4,513.34 million; and Rs 3,383.05 million, respectively. Company incurred a net loss amounting to Rs 7.49 million; earned a net profit amounting to Rs 5.46 million; and incurred net losses amounting to Rs 355.53 million and Rs 105.14 million, respectively for the six months ended September 30, 2015 and Fiscal Years 2015; 2014; and 2013. On a consolidated basis, EBITDA before exceptional items for the six months ended September 30, 2015 and Fiscal Years 2015; 2014;and 2013 stands at Rs 436.93 million; Rs 810.55 million; Rs 422.16 million; and Rs 486.07 million, respectively. For the eight months ended November 30, 2015, company recorded revenue from operations amounting to Rs 3,788.87 million; net loss amounting to Rs 37.11 million; and EBITDA before exceptional items amounting to Rs 581.35 million.