TISHHA NEWS / SUGANDH KHANDELWAL
Paras Healthcare Limited, India’s fifth-largest healthcare provider in terms of bed capacity in North India, Bihar, and Jharkhand, has received SEBI’s nod to float an Initial Public Offering (IPO). The company had filed a Draft Red Herring Prospectus (DRHP) with SEBI on 2 Aug. The proposed IPO is a mix of fresh issue of equity shares of up to Rs 400 crore and an offer for sale (OFS) of up to 1,49,74,010 crore shares by a promoter and an investor shareholder, according to the DRPH.
The public issue is mainly aimed at giving exit to private equity (PE) investor Creador. A small share of the IPO proceeds will also be used for funding hospital network expansion as the IPO may value Paras at Rs 4000 -4,500 crore.
About Paras Healthcare Limited:
Incorporated in 1987, Paras Healthcare Limited is one of the leading hospital chain operators. It is 5th largest healthcare provider in terms of bed capacity in North India, Bihar and Jharkhand amongits peers with an aggregate of 2,135 beds, as of March 31, 2024. Paras Healthcare Paras Healthcare offers several clinical specialties across its hospitals including Cardiac Sciences, Oncology, Neurosciences, Gastro Sciences and Orthopaedics and Joint Replacement. It has established centres of excellence across its hospitals, where it provides clinical specialties and these centres have been instrumental in launching new programs including organ transplant programs.
Some hospitals owned by Paras Healthcare and their number of beds:
- Paras Hospital, Gurgaon: The first Paras Hospital, established in 2006, has 250 beds
- Paras HEC, Ranchi: 300 beds
- Paras HMRI Hospital, Patna: 350 beds
- Paras Global Hospital, Darbhanga: 100 beds
- Paras Hospital, Srinagar: The largest private hospital in Srinagar, with 200 beds
- Paras Hospital in Kanpur: A new multi-specialty hospital with 450 beds is operational.
- Planned Hospital in Gurugram: A new hospital with 300 beds is planned to open in Fiscal 2027.
- Planned Hospital in Ludhiana: A hospital with up to 500 beds is planned to open in Fiscal 2028.
Summary of the industry in which the Company operates:
The domestic healthcare industry comprises of Healthcare Delivery (Hospitals, Clinics), Pharmaceuticals, Medical Devices, Medical Equipment,Diagnostic Services and other Support Services to the Healthcare Players.
The Indian healthcare delivery market to have reached approximately ₹ 6.3 trillion in value terms by the end of Fiscal 2024, with growth being contributed by the continuation of regular treatments, surgeries and in-patient department (“IPD”) including average revenue per occupied bed expansion for the sector. Growing and high realization medical tourism will contribute more to the industryParas recorded revenue of Rs.918 crore in FY23, a 17% rise, according to Care Ratings. The company is expected to have crossed Rs 1,000 crore revenue last financial year.
Objectives of Paras Healthcare IPO:
Fresh Issue
- Prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the company.
- Investment in its Subsidiaries, Paras Healthcare (Ranchi) Private Limited and Plus Medicare Hospitals Private Limited, in the form of debt or equity for repayment/prepayment of borrowings, in full or part, of such Subsidiaries.
- General corporate purposes.
Offer For Sale
The offer for sale comprises of 2,928,320 shares by the promoter Dr. Dharminder Kumar Nagar and up to 12,045,690 shares by investor Commelina (Creador).
Paras had raised Rs 260 crore from Creador by issuing Compulsorily Convertible Preference Shares (CCPS) in July 2017. The CCPS were converted into equity shares in September 2018, giving Creador a 24.68% equity stake in the company.
The proceeds from the Offer for Sale shall be received by the Selling Shareholders after deducting their proportion of Offer expenses and relevant taxes thereon.
Paras Healthcare proposes to utilize the net proceeds towards debt repayment, investment in subsidiaries and general corporate purposes.
Details of Pre-IPO Placement:
The company, in consultation with the BRLMs, may consider a Pre-IPO Placement, prior to filing of the Red Herring Prospectus. The Pre-IPO Placement, if undertaken, will be at a price to be decided by the Company, in consultation with the BRLMs. If the Pre-IPO Placement is completed, the amount raised pursuant to the Pre-IPO Placement will be reduced from the Fresh Issue, subject to compliance with Rule 19(2)(b) of the SCRR. The Pre-IPO Placement, if undertaken, shall not exceed 20% of the size of the Fresh Issue. Prior to the completion of the Offer, the Company shall appropriately intimate the subscribers to the Pre-IPO Placement, prior to allotment pursuant to the Pre-IPO Placement, that there is no guarantee that the Company may proceed with the Offer or the Offer may be successful and will result into listing of the Equity Shares on the Stock Exchanges. Further, relevant disclosures in relation to such intimation to the subscribers to the Pre-IPO Placement (if undertaken) shall be appropriately made in the relevant sections of the RHP and the Prospectus.
The exact details, including the IPO size, price band, and timeline for the offering, are still to be disclosed, and the company is expected to finalize these aspects in the upcoming months. Once approved by SEBI, the IPO will offer investors an opportunity to invest in the growing healthcare sector in India, which is seen as a key area for expansion given the country’s rising healthcare needs.
RISK FACTORS:
An investment in Equity Shares involves a high degree of risk. Potential investors should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties before making an investment in the Equity Shares. The risks are not the only ones relevant to us or our Equity Shares, butalso the industry in which we operate. Additional risks and uncertainties, not currently known to us or that we currently do not deem material may also adversely affect our business, results of operations, cash flows financial condition and prospects. If any of the following risks, or other risks that are not currently known or are not currently deemed material, actually occur, our business, results of operations, cash flows and financial condition could be adversely affected, the price of our Equity Shares could decline, and investors may lose all or part of their investment. In order to obtain a complete understanding of the Company and business, prospective investors should read this section in conjunction with “Our Business”, “Industry Overview”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” . In making an investment decision, prospective investors must rely on their own examination of us and our business and the terms of the Offer including the merits and risks involved.
Conclusion:
The company earns bulk of its revenue from Gurugram, Patna and Panchkula markets. It is planning to add another 800 beds in the next 2-4 years in Gurugram and Ludhiana.
While Gurugram and Udaipur are company-owned, the rest are based on asset light models where Paras takes real estate on long term leases.
