Suraksha Diagnostic Ltd, which is backed by healthcare-focused private equity firm OrbiMed, received a lukewarm response from public market investors as its initial public offering barely managed to cross the finish line on the third and final day of the issue.
The offering of 13.43 million shares, excluding the anchor allotment option, received bids for a tad more than 17 million shares by late evening on Tuesday. This means the IPO, which opened last Friday, was subscribed 1.27 times.
Institutional investors bid for 1.74 times their quota while non-institutional investors placed bids for 1.40 times the shares set aside for them. Retail investors' portion was covered only 94%, stock-exchange data showed.
Suraksha Diagnostic had filed draft documents for the IPO in July and received regulatory approval last month. The IPO doesn’t include any fresh issue of shares and entirely comprises an offer for sale.
OrbiMed is selling over 10.66 million shares. This is more than half the 17.37 million shares, or a 33.35% stake, it holds in the diagnostics chain. The company’s promoters are selling about 6.3 million shares while two other individual shareholders are offloading 2.13 million shares, the IPO documents show.
The diagnostics chain has set a price band of Rs 420 to Rs 441 per share for the Rs 846.25-crore IPO. OrbiMed will mop up Rs 470 crore ($55.7 million) through the partial exit and is just about meeting benchmark returns.
OrbiMed first invested in Suraksha in December 2016. It put in Rs 164 crore through a primary infusion and a secondary purchase of shares from PE firm Lighthouse.
For FY24, Suraksha recorded close to Rs 219 crore in revenue, of which 95.48% came from its core geography of Kolkata and rest of West Bengal. It posted an EBITDA of Rs 74 crore and a net profit of Rs 23 crore. It derived 53.3% of its revenue from pathology, 46% from radiology, and 0.18% from Covid-19 testing.
“The company plans to spend Rs 70 crore every year to pursue organic and opportunistic inorganic expansion in the eastern region of India,” said Ritu Mittal, CEO and managing director of Suraksha Diagnostic, at a press conference announcing the IPO. “It will be funded via internal accruals or debt funding if needed,” she said.
