Bangalore-based Cancer specialist HealthCare Global Enterprises Ltd (HCG) has filed draft red herring prospectus (DRHP) with capital market regulator SEBI for its initial public offering (IPO). The issue will comprise of 3.11 crore shares, or 36.83% of the total post-issue shares in the company. As with most other issues these days, this latest IPO will offer an exit to existing shareholders (that’s an impressive list but more on it later) which plan to sell 1.95 crore shares through the IPO. The other 1.16 crore shares will be issued by the company. Kotak Mahindra Capital Company, Edelweiss Financial Services, Goldman Sachs (India) Securities, IDFC Securities, IIFL Holdings and Yes Bank are the merchant bankers handling the issue while Karvy is the registrar to the IPO.
No issue size
The company has not stated the size of the issue but has only indicated how many shares it plans to sell. You have no reason to doubt us but if you are interested in going through the 600 pages of the prospectus, here is the link to SEBI website.
Use of funds
However, it has indicated it plans to raise at least INR235.84 crore by selling 1.16 crore shares. It is important to note that the company will not get any proceeds from the shares offered by existing shareholders. Out of the total, INR51.9 crore has been allocated for purchase of medical equipment while INR36.8 crore will be used to buy IT software, services and hardware. However, the biggest chunk of INR147 crore has been set aside for pre-payment of debt.
The list of existing shareholders willing to sell their shares is rather long in the case of HealthCare Global Enterprises. The biggest among these is PIOF which intends to sell 76.9 lakh shares while India Build-Out Fund aims to offload 61.04 lakh shares. PIOF is the investment vehicle of Azim Premji’s PremjiInvest and holds 21.11% stake in the company. India Build-Out Fund holds 17.22% stake in HealthCare Global Enterprises. PIOF and India Build-Out Fund plan to halve their shareholding in the company. In addition, AOPL, V-Sciences plan to offer their shares.
Since HCG is a hospital, several doctors have equity ownership in the company and some of these shares are desperate to come to the market. Selling shareholders here are Dr. BS Ajai Kumar, Dr. G Kilara, Dr. K Harish jointly with Shubha Harish, Dr. Nalini Kilara, Ganga Ramaiah, Gangadhara Ganapati, Rajesh Ramaiah, Shubha Harish jointly with Dr. K Harish.
Impressive but is it any good to get my hard earned money?
That’s the most important question for IPO investors and we may be playing spoilsport here. The company has been consistent with its revenues, more than doubling its top line over the last five years. However, this consistency has gone out of window in case of profits which stood at mere INR54.6 lakh in last fiscal. Nevertheless, it makes the cut for SEBI’s requirement for “three year profitability”. The last time HealthCare Global Enterprises was really profitable was in fiscal 2011 when it earned INR6.3 crore.
HealthCare Global Enterprises’ consolidated financial performance (figures in INR crore)
|Profit/(loss) after tax||6.3||(3.3)||(10.5)||(35.5)||0.55|
Source: HealthCare Global Enterprises’ DRHP