On the heels of our report that VLCC Health Care is close to file its IPO prospectus, the company has submitted its draft red herring prospectus (DRHP) with the capital market regulator SEBI. VLCC IPO will be managed by ICICI Securities, Axis Capital and Citigroup Global Markets India. According to the prospectus filed with SEBI, the IPO will comprise of an offer for sale (OFS) by existing investors as well as issue of new shares by the company.
While the company has not revealed more details about the IPO, it is expected to raise INR600-700 crore from the maiden public issue. The Gurgaon-based healthcare and fitness company has indicated it will receive at least INR308.7 crore from issue of fresh shares. VLCC plans to use INR145.44 crore towards setting up new wellness centers in India and abroad while INR68.34 crore will go towards debt reduction. An investment of INR28.13 crore will be made to set up a manufacturing facility. INR50 crore will go towards brand development, though we believe the brand already has high visibility. As one can see, most of these investments will be spread over the next two to three years.
In addition, the OFS will involve 37.67 lakh shares by existing shareholders Indivision India Partners and Leon International Limited. Indivision India Partners, a private equity fund of Everstone, plans to sell 25.52 lakh shares while another 12.13 lakh will be offloaded by Leon International Limited. Both investors hold a combined 64.92 lakh shares or 28.76% stake in the company.
VLCC aims big with expansion plans
Started by Vandana Luthra in 1989 with just one center, VLCC has now expanded to a network of 236 centers across 122 cities. These centers are spread across not only India but also in South East Asia, the GCC region and Africa. Out of the total, VLCC has 49 centers in overseas markets. Following the IPO, the company plans to use the funds to further expand its network by 64 centers.
The Gurgaon-based company posted a profit of INR20.5 crore in the fiscal year ended 31 March 2015 on revenues of INR816.3 crore. While VLCC’s revenues have grown consistently over the last five years, its profitability has come under pressure in recent years amid increasing competition.