New Delhi: Renowned cardiologist Naresh Trehan‘s Global Health, which owns and operates five super-speciality hospitals under the brand Medanta, is building a 550-bed facility in Noida with an investment of Rs 350 crore.
The initial public offer (IPO) of Global Health was subscribed at 49 per cent on the second day of the offer. At the upper end of the price band, the company is expected to fetch Rs 2,206 crore. The IPO consists of a fresh issue of equity shares aggregating to Rs 500 crore, and an offer for sale (OFS) of up to 5.08 crore equity shares.
The second largest IPO of the year after Delhivery’s Rs 5,235 crore issue in May — is closing on Monday.
“When our Noida hospital is fully ready by FY25, we will have 3,500 operational beds, up from 2,500 beds now. Like our preferred model, this one is also fully-owned by us as the property is on 90-year lease,” Global Health group chief executive Pankaj Sahni said.
However, Sahni did not specify where the additional 450 beds will come from. He further said the Noida facility spanning 8 lakh square feet is Medanta’s second in Delhi-NCR, and is in construction phase. The first phase will be ready in FY25 with 300 beds.
On completion, it will have 550 beds, he said without disclosing the investment details. But according to analysts, going by average industry cost, the hospital will need an investment of about Rs 350 crore.
The group’s flagship, Medanta the Medicity Hospital in Gurugram is owned by the company and so is the Lucknow property. Its other three hospitals are in Indore, Patna and Ranchi.
Hospital founder and chairman Dr Trehan owns 35 per cent stake in the company and he is not selling any share in the issue, Sahni said. Carlyle Group, which entered the company in 2013 taking over 26 per cent stake at a price of Rs 144.2 a share, is exiting the company, he said. It has already sold 5.6 per cent in pre-IPO stage to RJ Corp, SBI Mutual Fund and Novo Holdings, and will sell the remaining stake through offer-for-sale, Sahni said.
Singaporean sovereign fund Temasek entered the firm in 2015, and added 2 per cent to its stake in November 2021, he said, adding they are also not selling any equity.
Refusing to divulge how much they have invested, Sahni said Temasek did not invest directly into the company as they bought the shares from secondary investors. But now Temasek holds nearly 18.9 per cent stake and is not selling any shares in the IPO, he added.
Sahni said the company will use Rs 375 crore from the Rs 500 crore of the fresh equity sale proceeds to repay the debt it has taken to build the Lucknow and Patna facilities.
Global Health generated income from health services of Rs 1,480.57 crore, Rs 1,417.84 crore, Rs 2,100.39 crore, Rs 473.21 crore and Rs 596.09 crore, respectively in fiscals 2020, 2021 and 2022 and the three months to June 2021 and 2022, and earned a pre-tax profit of Rs 230.45 crore, Rs 222.85 crore, Rs 489.76 crore, Rs 105.77 crore and Rs 141.65 crore, respectively. Global Health generated total income of Rs 1,544.27 crore, Rs 1,478.2 crore and Rs 2,205.8 crore in Fiscals 2020, 2021 and 2022, respectively.
But the company has over Rs 500 crore of cash balances and gross debt of around Rs 800 crore as of June 2022, which post-IPO will nearly be halved.
Global Health is among the largest private multispecialty tertiary care providers with five hospitals offering core specialties of cardiology, cardiac sciences, neurosciences, oncology, digestive and hepatobiliary sciences, and orthopaedics. Medanta is valued at over Rs 9,000 crore now.
According to analysts, the domestic healthcare sector is projected to grow from Rs 5 lakh crore in FY22 to Rs 8.3 lakh crore by FY26 and private hospitals are expected to increase their share from 65 per cent in FY22 to 74 per cent by FY26.
Recently, Manipal Hospitals bought Columbia Asia’s India hospital assets for over Rs 2,000 crore. In August this year, New York-based private equity firm KKR sold its remaining 27.5 per cent stake in Max Healthcare for Rs 9,185 crore.
In 2021, healthcare and related sectors witnessed 55 deals valued at USD 1.4 billion involving private equity funds, which was higher than 32 in 2020. The market is also abuzz that a major conglomerate is eyeing significant stake in Apollo Hospitals in its bid to make a foray into healthcare sector.