Hospital chain Aster DM Healthcare Ltd has refiled the prospectus for its planned initial public offering (IPO) with a reduced offer size.
Mint had reported in June that the company, which runs hospitals in India and West Asia, will refile its draft red herring prospectus (DRHP) given worsening market conditions in certain key geographies such as Saudi Arabia, which in turn had impacted the valuation of the company.
A DRHP, or draft share-sale document, provides information about a firm, its business and promoters, how it intends to use the proceeds of an IPO, and the potential risks it faces.
In its earlier DRHP, Aster DM disclosed that in Saudi Arabia, where a substantial portion of its revenue is derived from patients referred and funded by the ministry of health, a decline in oil prices and the overall economic conditions have had a direct impact, resulting in a rise in receivables from the ministry.
According to the new DRHP, available on the websites of the investment banks to the IPO, the firm is looking to raise around Rs775 crore in primary capital through a fresh issue of shares. The company will use the proceeds to repay part of its debt and to purchase medical equipment, it said.
The company’s promoters and private equity investor Olympus Capital will also sell part of their stakes through an offer for sale in the IPO. Collectively the two are selling around 16.34 million shares.
Aster DM has significantly reduced the size of the offer for sale component in the refiled DRHP.
Earlier, the offer for sale comprised 36 million shares, with Olympus Capital looking to offload around 19 million shares through the IPO. Another private equity investor in the firm—True North (earlier known as India Value Fund Advisors)—has shelved plans to pare its stake in the company. True North was earlier looking to sell around 4.8 million shares. Olympus currently owns 26.18% stake in the company, while True North owns around 11.54%.
The refiling of the DRHP has also seen a churn in the investment banker syndicate managing the IPO.
The company has dropped three investment banks— Bank of America Merrill Lynch, Edelweiss Financial Services Ltd and SBI Capital Markets Ltd. Axis Capital and Yes Securities have been brought on as replacements.
Aster has healthcare facilities located across all the Gulf Cooperation Council states of United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain, as well as in Jordan, India and the Philippines.
The company is present in multiple segments of the healthcare industry, including hospitals, clinics and retail pharmacies.
Aster’s portfolio comprises of 7 hospitals, 89 clinics and 202 retail pharmacies in the GCC states, 11 multi-speciality hospitals and 6 clinics in India, and one clinic in the Philippines as of 31 March.
India contributed 16% of the company’s overall revenue in the financial year ended 31 March 2017. Aster reported a revenue of Rs5,931.2 crore.