Dr Lal Path Labs has filed draft red herring prospectus (DRHP) with the capital market regulator SEBI for its initial public offering (IPO). The IPO will be managed by Kotak Mahindra Capital and Citigroup Global Markets India. According to the prospectus filed with SEBI, the IPO will only comprise of offer for sale (OFS) and thus, the company will not receive any proceeds from the public issue.
While it is not clear yet how much funds will be mobilized through the IPO, earlier reports indicated the diagnostic and pathology laboratories chain planned to raise nearly INR700 with a post-issue valuation of nearly INR6,000 crore.
The OFS will involve 11.6 million shares, or 14.1% of the company’s equity capital. This involves 1.26 million shares by Dr. Arvind Lal, 2.05 million shares by Dr. Vandana Lal, 238,226 shares by Eskay House (HUF), 550,386 shares by Anjaneya Lal, 5.86 million shares by Wagner Ltd, 1.47 million shares by WCF (Westbridge Crossover Fund), and 161,070 shares by SIH (Sanjeevini Investment Holdings). Among these, Dr. Arvind Lal, Dr. Vandana Lal, Eskay House (HUF), and Anjaneya Lal are among the promoters of the company.
Founded in 1949, Dr Lal PathLabs employs more than 3,000 people and serves almost 12 million customers a year. WestBridge made its first investment in the company in 2005 before being acquired by Sequoia Capital. However, a resurrected WestBridge, along with another PE player TA Associates, bought the original stake in February 2013 in a deal that valued Dr Lal PathLabs between INR1,500 crore and INR1,750 crore. At the midpoint of this valuation, WestBridge Capital Partners appears to be ready to part exit its position at a multiple of 3.7X. Sanjeevini Investment Holdings invested in the company in 2013.
The Gurgaon-based company posted a profit of INR879.7 million in the fiscal ended 31 March 2015 on revenues of INR6.4 billion. Both figures were up from previous year, marking a growing demand of the company’s services. In recent years, PathLabs also acquired some of its competitors including Kolkata-based Medicave Medical Systems and Ahmedabad-based APL Institute of Clinical Laboratory & Research.
Several other players in the sector have started the process to bring their IPOs. Important among these are HealthCare Global, Thyrocare Technologies Ltd, Narayana Health and Aster DM Healthcare although no other company except HealthCare Golbal has filed prospectus with the Securities and Exchange Board of India (SEBI).