Shalby hospital chain files draft IPO papers with Sebi

The Shalby IPO includes an offer for sale of 1 million shares by promoter Dr Vikram Shah, following which his stake will drop to about 7.5% from 9.85% now


Shalby hospitals aims to raise about Rs580 crore through the issue of new shares, according to the draft IPO documents submitted to Sebi.
Shalby hospitals aims to raise about Rs580 crore through the issue of new shares, according to the draft IPO documents submitted to Sebi.

Mumbai: Shalby Ltd, which runs a multi-specialty hospital chain, has filed a draft red herring prospectus (DRHP) with the capital markets regulator for its proposed initial public offering (IPO).

The hospital chain aims to raise about Rs580 crore through the issue of new shares, according to the draft IPO documents. The IPO will include an offer for sale of about one million equity shares by its promoter Dr Vikram I. Shah. His stake will drop to about 7.5% after the share sale from 9.85% now.

The proceeds are expected to be used to repay borrowings as well as to purchase medical equipment for existing and upcoming hospitals.

Shalby also plans to use part of the proceeds to purchase medical equipment, interiors, furniture, and allied infrastructure for upcoming hospitals besides leaving a portion for general corporate purposes.

In December, Mint reported Shalby had hired investment banks for its proposed IPO that would see the firm raise around Rs500 crore.

Founded in 1993 by Shah as a six-bed facility, Shalby is now a chain of 11 multi-specialty hospitals—eight fully operational and three set up recently.

Shalby Hospitals specializes in joint replacement surgery, spine surgery, neurology and neurosurgery, cardiac surgery and sports injury care.

According to the draft IPO documents, the firm had an aggregate capacity of 2,102 beds as on 31 March 2017. It was looking to increase this to 2,500 this year, according to its website.

The hospital chain also has clinics in Kenya, Tanzania and Uganda. It has a tie-up with United Arab Emirates-based RAK Hospital Since December 2016, four healthcare services firms have tapped the primary markets to fund expansion and provide an exit to private equity investors. Collectively, these firms—Dr Lal Pathlabs Ltd, Narayana Hrudayalaya Ltd, HealthCare Global Enterprises Ltd and Thyrocare Technologies Ltd—have raised Rs2,375 crore.

In December, a Mint report citing Investec, a global specialist banking group, said India’s healthcare sector will see investors looking to exit close to $3 billion of primary investments in two-to-three years through secondary sales and public market listings.

Last month, Mint reported that Aster DM Healthcare Ltd, which runs hospitals in India and West Asia, is looking to re-file its draft share sale documents because of concerns over the valuation of its overseas operations, from which the company derives a large part of its revenue. Aster DM had filed documents for an IPO in June and received approval from the Securities and Exchange Board of India (Sebi) in November.

Earlier this month, Ahmedabad-based pharmaceutical firm Eris Lifesciences Pvt. Ltd received approval from the regulator for its proposed IPO.

For the nine month period to December, Shalby reported a consolidated net profit of Rs45.87 crore on a revenue (from operations) of Rs240.58 crore. Its total debt stood at Rs70.27 crore, as on 31 December 2016, according to the DRHP.

Edelweiss Financial Services, IDFC Bank and IIFL Holdings will manage the IPO.