A well-known provider of healthcare services in North India, Paras Hospitals is getting ready to submit its draft IPO documents to the Securities and Exchange Board of India (SEBI). The hospital network wants to seek more money for growth and make it easier for Creador, its private equity backer, to leave the company after eight years of ownership.
In the next two to three weeks, Paras Hospitals intends to submit its draft red herring prospectus (DRHP) to SEBI, according to people with knowledge of the situation. This application is a big step closer to the initial public offering (IPO), which should help the company raise about Rs 1,000 crore. On March 13, Moneycontrol published the first story stating that Paras had started talking to investment banks about the IPO. Three investment banks have been chosen by the business to oversee the sale by April 26.
With the help of the anticipated IPO, Paras Hospitals will be able to raise an additional Rs 300–400 crore. Both capital expenditures and debt repayment will be covered by this capital inflow. The hospital chain owed almost Rs 400 crore in net debt as of March 31. For Creador, which invested Rs 275 crore in Paras in 2017 and now owns nearly a quarter of the company, the IPO will also present a sizable exit opportunity.
In North India, Paras Hospitals has been growing its reach. The network began operations in Srinagar last year and just opened a new hospital in Kanpur. The business is now developing two further hospitals, one each in Ludhiana, Punjab, and Gurugram, India. Tier 2 and 3 towns in states like Uttar Pradesh, which have sizable populations but insufficient healthcare, especially in smaller cities and towns, are the focus of the expansion strategy. Uttar Pradesh’s possible expansion sites include Gurgaon, Prayagraj, Agra, Varanasi, Lucknow, and Meerut.
The organization started entered the healthcare industry in 2006 when it opened its first location in Gurugram. With more than 2,000 beds, Paras Hospitals currently runs seven multi-superspecialty hospitals under the name Paras Health. The hospital chain currently operates in Jammu & Kashmir, Bihar, Rajasthan, Jharkhand, and Haryana. There are also plans to expand into Uttar Pradesh in the near future.
Paras Healthcare has shown steady financial development. The company’s consolidated operational revenue increased from Rs 780 crore in FY22 to Rs 918 crore in FY23, a 17 percent increase. The credit rating company Care Ratings mentioned this growth in a report. Critical therapeutic areas, including as cancer treatment (which accounted for almost 17% of the hospital chain’s total gross revenue in FY23), orthopaedics and joint replacement (14%), cardiology (11%), and neurosurgery (9%), are the main sources of income. In FY23, these segments as a whole provided 52% of the company’s gross sales, up from 48% the year before. Other medical disciplines like neurology, nephrology, gastrointestinal, GI surgery, heart surgery, and urology provide the remaining revenue.
The upcoming IPO comes after Creador’s previous attempt to sell its ownership of Paras Hospitals. Moneycontrol revealed in May 2023 that Creador had assigned an investment bank to find purchasers for its ownership. Both Paras Hospitals and Creador see great benefit from the impending IPO, which will give the hospital chain the funding it needs to grow and expand while giving the private equity investor a profitable way out.
Before the deadline, Paras Hospitals had not responded to requests for comments, despite several attempts. For Paras Hospitals to maintain its position in the cutthroat healthcare industry and carry out its objective of offering top-notch medical services throughout North India, the IPO’s success will be crucial.
SOURCE:
MONEYCONTROL
