US-based private equity firm General Atlantic is looking to sell nearly half of its stake in Hyderabad-headquartered multi-disciplinary healthcare services provider Krishna Institute of Medical Sciences (KIMS Hospitals), a person aware of the development said.
General Atlantic holds 40.91% stake in KIMS Hospitals acquired at an average price of Rs 310.26 a share. The PE firm is now looking to sell over 18% stake in KIMS, or 13.9 million shares, through an initial public offering, the person cited earlier said.
On February 19, the board of General Atlantic had approved a resolution for the PE fund’s stake sale in KIMS Hospitals, after having stayed invested for nearly three years.
The PE fund had acquired a 38.99% stake in KIMS Hospitals, including 29.99% held by ICICI Venture Funds, in June 2018.
“KIMS Hospitals is looking to raise around Rs 700 crore through its IPO that includes Rs 200 crore of fresh issue, and has filed an application with the capital markets regulator Sebi,” the source said. “Of this, around Rs 150 crore would be used to repay certain debts and the balance towards general corporate purposes that include capital expenditure, strategic initiatives, partnerships, joint ventures and acquisitions.”
KIMS Hospitals’ chief executive Abhinay Bollineni confirmed the IPO plan and said General Atlantic has decided to offload nearly half of its equity. He did not give more details.
The PE fund holds 31.7 million shares in KIMS Hospitals, translating into 40.91% stake, while the balance is held by the promoters led by Bhaskara Rao Bollineni and others.
KIMS Hospitals is the largest corporate healthcare group in the Telugu states of Telangana and Andhra Pradesh with a total of 3,064 beds spread across nine multi-speciality hospitals promoted by leading cardiothoracic surgeon Bhaskara Rao Bollineni.
For the last three years, the hospital chain has seen its bed capacity increase by nearly 20% with an occupancy ratio of around 80%. The company, which reported a post-tax profit of Rs 115 crore on a revenue of Rs 1,129 crore in the year ended March 2020, has reported Rs 147 crore of post-tax profit on a revenue of Rs 977 crore for the nine months ended December 2020.
“Having emerged the largest corporate healthcare group in Telugu states in beds capacity through a series of acquisitions, KIMS Hospitals has chalked out a growth strategy that includes acquisitions to spread its footprint in neighbouring Karnataka, Tamil Nadu, Odisha and Central India,” said the source. “Accordingly, KIMS Hospitals has acquired land in neighbouring states for greenfield expansion and is also in the process of identifying target hospitals for likely acquisitions in the coming months.”
