Manipal shortlists banks for $1 billion IPO, to file by June

The healthcare chain has shortlisted Kotak Mahindra Capital Co., JP Morgan, Axis Capital, Jefferies and Goldman Sachs to manage the IPO, the people said, adding formal mandates have not been issued yet. The company, among India’s top three hospital chains, is expecting a valuation of $8-10 billion.

Manipal plans to list on the exchanges by the end of FY26, one of the three people cited above said. Some of the existing investors of Manipal are likely to sell some stake through an offer for sale. The company may also raise ₹5,000-6,000 crore by selling new shares, the second person added.

Spokespersons for Manipal Hospitals, JPMorgan, and Jefferies declined to comment, while Temasek, Goldman Sachs, Axis Capital and Kotak Mahindra Capital Co. did not respond to emailed queries.

The company does not need capital immediately, but it will expand its war chest for a large acquisition through a primary capital raise, the two people said. Some of the capital may be used to pay back debt, Mint reported earlier in January this year.

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In April 2023, Temasek acquired 41% stake in Manipal for more than $2 billion, valuing it at nearly $4.8 billion or ₹40,000 crore. It acquired the stake from Manipal founder Ranjan Pai and other investors such as NIIF and TPG, taking its shareholding to around 59%. Manipal Education and Medical Group Pvt. Ltd retains around 31% of the company, with TPG holding 10-11%.

Last year, Temasek sold nearly 8% stake in Manipal to incoming investors Mubadala Investment Co., Novo Holdings and California Public Employees’ Retirement System (Calpers), in a bid to de-risk its holdings in the company.

If the IPO takes shape, it would be one of the largest from India’s healthcare industry. In November last year, Aster and Blackstone-backed Quality Care agreed to merge and create one of the top three hospital chains in India with more than 10,150 beds. The reverse merger has now created the largest listed healthcare provider in India.

Founded in 2010 by Ranjan Pai, Manipal Hospitals Enterprises currently has a pan-India footprint of more than 30 hospitals with over 9,500 beds and over 5,000 doctors across cities such as Bengaluru, Mangalore, Mysore, Vijayawada, Salem, Dwarka, Palamvihar, Goa, Jaipur, Ghaziabad, Patiala, Pune and Kolkata.

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As per India Ratings & Research rating report from November 2023, Manipal Hospitals’ consolidated revenue increased to ₹4,800 crore in FY23 from ₹4,000 crore in FY22, while consolidated Ebitda margin rose to 26.6% from 23.2% in the same period, supported by its improved case mix and increased in-patient admissions at both existing and acquired hospitals.

“The overall occupancy levels for Manipal Hospitals Enterprises Ltd (MHEPL) moderated to 58% in FY23 (FY22: 64%) with net addition of 283 beds, mainly in the hospitals located at Whitefield, Goa, Jaipur under MHEPL during the year. Furthermore, MHEPL reported a 14% yoy improvement in the average revenue per occupied bed at the consolidated level,” the report said.

During the first half of FY24, it recorded a revenue of ₹2619 crore, with an Ebitda of ₹741 crore at the consolidated level.

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