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Global Health Ltd : SUBSCRIBE

Salient features of the IPO:

• Global Health Ltd. (Global Health), which operates and manages hospitals under the “Medanta” brand, is coming up with an IPO to raise around Rs. 2,200cr, which opens on 3rd Nov. and closes on 7th Nov. 2022. The price band is Rs. 319 - 336 per share.

• The IPO is a combination of fresh issue and OFS portion. Global Health will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs. 375cr will be invested in its subsidiaries, which in turn will utilize the fund for the prepayment/repayment of debt. Residual funds will be used for general corporate purposes.

• One of the selling investors i.e. Anant Investments (an affiliate of Carlyle Group) held 25.66% stake in the company. On 20th Oct. 2022, it entered into a share purchase agreement to offload 1.434cr shares (representing 5.66% of the pre-IPO equity share capital) at Rs. 336 per share to RJ Corp Ltd. (one of the existing investor in Global Health with 3.95% stake); and to two new investors i.e. SBI Mutual Fund and Novo Holdings A/S.

• Pursuant to the agreement, Anant Investments’s pre-IPO stake in Global Health will come down to 20%, while RJ Corp Ltd.’s stake will increase to 5.83%. SBI Mutual Fund and Novo Holdings A/S each will have 1.89% stake in the company.

• Through this IPO, Anant Investments will fully offload its residual stake in Global Health.

Key competitive strengths:

• Tertiary and quaternary care provider in India, recognized for clinical expertise in particular in dealing with complicated cases

• Focus on clinical research and academics

• ‘Doctor-led’ hospitals driven by skilled and experienced doctors in the healthcare space

• Large-scale hospitals with sophisticated infrastructure, medical equipment and technology

• Track record of operational and financial performance

• Focus on under-served areas with dense population and presence in top or capital cities of large states (NCR, Lucknow and Patna) • Growth opportunities in existing facilities and diversification into new services, including digital health

• Experienced senior management team with institutional shareholder support

Risk and concerns:

• Unfavorable government policies & regulations

• Lower hospital bed occupancy rate

• Difficulty in reviving loss making subsidiaries

• Continued subdued business through medical tourism

• Unexpected delay in the commissioning of hospital in Noida

• Retention of healthcare professionals

• Difficulty in maintaining the profitability

• Competition

Below are the key highlights of the company:

• Over FY17-22, Indian healthcare delivery market is estimated to have grown by 10-12% CAGR to reach a size of around Rs. 5lakh cr. Further with strong sector macros like lower hospital bed density with respect to the population, lower expenditure on healthcare infrastructure as compared to developed & several developing countries, rising income levels & increasing affordability for healthcare services and improving potential of Ayushman Bharat scheme of the government, the healthcare delivery market is estimated to grow at 13-14% CAGR over FY22-26E to reach a size of Rs. 8.3lakh cr.

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