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The IPO of Global Health (Medanta) is India’s Largest Ever in the Hospital Sector

Global Health, a Medanta hospital operator, received a full subscription in its initial public offering (IPO), which concluded on Monday. The IPO received 9.58 times oversubscription on the final day, indicating a massive appetite among qualified institutional buyers (QIBs). Global Health is the country’s largest hospital-related IPO.

According to BSE data, Global Health received nearly 44.80 crore equity shares in total bids against its offered size of over 4.67 crore equity shares, registering a subscription of 9.58 times.

Furthermore, the portion reserved for qualified institutional investors was subscribed to 28.64 times, while the portion reserved for non-institutional investors was subscribed to 4.02 times.

Demand from retail individual investors (RIIs) was, however, low because the reserved portion for this category was not fully subscribed. RIIs subscribed to the IPO by 88% of the allocated shares.

The IPO will be allocated 50% of the total issue size to qualified institutional buyers (QIB), 15% to non-institutional investors, and the remaining 35% to retail individuals.

The initial public offering (IPO) began on November 3 and ended on November 7. Its price range was set at $319 to $336 per piece.

The IPO included a fresh issue worth 500 crores and a promoter offer for sale (OFS) of nearly 5.08 crore equity shares. Anant Investments and Sunil Sachdeva are among the selling shareholders. The company intended to raise approximately Rs. 2,205 crores through the offering.

The IPO was led by Kotak Mahindra Capital, Credit Suisse Securities (India), Jefferies India, and JM Financial.

As of March 31, 2022, Global Health was one of the largest private multi-specialty tertiary care providers in the North and East regions of India in terms of bed capacity and operating revenues. According to CRISIL Report, the company’s key specialties are cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopedics, liver transplant, and kidney and urology.

Notably, Global Health is not the only hospital that has gone public this year. Rainbow Hospitals previously announced an IPO of 1,581 crores in April 2022. Global Health, on the other hand, is the largest IPO in the hospital sector in terms of size since April 2007.

Following Global Health, the most recent IPO worth more than 2,000 crores was KIMS, which launched a public offering worth 2,143 crores in June 2021.

In the meantime, there was no hospital IPOs in 2019 or 2020. Aster DM launched its initial public offering (IPO) in February 2018 for Rs. 980 crores. Shalby Hospitals went public in December 2017 for 505 crores. Furthermore, Healthcare Global IPO entered in March 2016 to raise 650 crores, following Narayana Hrudalaya IPO worth 613 crores in December 2015.

There were no IPOs in the hospital sector between 2008 and 2014. However, Fortis Healthcare, an Indian multinational chain of private hospitals, launched its initial public offering (IPO) in April 2007 for Rs 497 crore.

Global Health’s equity shares, like those of the other hospitals mentioned, will be listed on the stock exchanges BSE and NSE.

On Monday, Global Health was available in the grey market for a premium of 16. This implies that the likely listing of Global Health is around 352 (upper price band of 336 + 16). It should be noted that GMP prices change on a daily basis, so listing expectations will vary accordingly.

Global Health has good operating metrics and a financial profile, according to Anand Rathi’s IPO note, with topline and margin increasing over time. Medanta is fairly valued when compared to its listed peers.

Ventura Securities stated in its note that Global Health has five hospitals in Gurugram, Indore, Ranchi, Lucknow, and Patna and that it is building a new hospital in Noida that will open in FY25. They offer healthcare in over 30 medical specialties and employ over 1300 doctors who are led by experienced department heads.

According to Ventura’s note, “we expect Global Health Ltd’s revenue/ EBITDA/ PAT to grow at a CAGR of 19.5%/ 23.7%/ 37% to Rs 3700 crore/ 859 crore/ 504 crore respectively over FY22- 25E, while EBITDA and PAT margins are also expected to improve by 220bps to 23.2% and 450bps to 13.6%.”

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