GPT Healthcare IPO : 7 things to know
GPT Healthcare Ltd, which operates and manages hospitals and healthcare centres under the brand name of ILS, had filed its draft red herring prospectus (DRHP) in October 2021 and SEBI has already approved the IPO in January 2022. However, due to the fairly volatile market conditions and IPOs virtually reducing to a trickle, GPT Healthcare Ltd is yet to announce the dates of its IPO.
The GPT Healthcare IPO will be a combination of a fresh issue and an offer for sale. The IPO is expected to happen most likely in the next fiscal year.
7 things to know about GPT Healthcare IPO
1) GPT Healthcare Ltd has filed for an IPO with SEBI for up to Rs.500 crore. This comprises of a fresh issue of Rs.17.50 crore and an offer for sale or OFS of 298.90 lakh shares. However, since the price band for the stock is not yet fixed, the size of the OFS and the value of the overall issue is not known as of now. GPT Healthcare Ltd is into managing mid-sized hospitals and offers hospital management services under the ILS brand. .
2) Out of the total IPO issue size, let us look at the offer for sale or the OFS portion first. The OFS comprises of 298.90 lakh shares by the early shareholders and promoters of the company. Among the key persons tendering shares as part of the offer for sale, the biggest chunk will be sold by the early investor, Banyan Tree Growth Capital II LLC, which will sell a total of 260.80 lakh shares. Banyan Tree currently holds 32.6% stake in GPT Healthcare Ltd.
Another 38 lakh shares will be offloaded by the promoters of the company. The OFS will not be capital dilutive or EPS dilutive but will enable the early investors to partially monetize their stake and also improve the free float in the company. Banyan Tree PE Fund will fully exit its holdings in GPT Healthcare Ltd via the offer for sale tendering of shares.
3) The Rs.17.50 crore fresh issue portion will be used for predominantly for the purchase of medical equipment. Over the next two years, GPT Healthcare Ltd plans to spend close to Rs.13.20 crore in purchasing new medical equipment for its facilities. In addition, the company will use a small portion of the fresh issue for general corporate expenses also.
The fresh issue portion is a very small part of the IPO hence the impact on equity dilution and EPS dilution due to the fresh issue component will be quite small.
4) GPT Healthcare Ltd was founded in the year 2000 by Dwarika Prasad Tantia and Dr. Om Tantia as an 8-bed hospital in the Salt Lake area of Kolkata in West Bengal. Currently, GPT Healthcare Ltd operates a total of 3 hospitals in West Bengal under the brand name of ILS Hospitals and it additionally operates one hospital in Tripura too.
Currently, the promoter group holding company, GPT Sons Private Limited holds 67.34% in the company and while Banyan Tree will entirely exit their stake, the promoters will only partially monetize their stake in GPT Healthcare Ltd.
5) Since the company is into outsourcing hospitals, it operates on an asset light model that allows them to scale up quickly and maintain return on capital ratios at the same time. GPT Healthcare Ltd has also signed a memorandum of understanding and a long term lease for a 140-bed hospital in Ranchi, in the state of Jharkhand. This entails a Rs.50 crore investment and will be completed by the year 2025.
6) For the latest financial year for which the numbers were reported i.e. FY21, GPT Healthcare Ltd reported revenues of Rs.248 crore. The revenues were up 15% yoy as compared to Rs.216 crore in the FY20 period.
Due to its asset light model, GPT Healthcare Ltd has managed to maintain its EBITDA (earnings before interest, tax, depreciation, amortization) margins at above 22%, which is extremely healthy in this line of business. These operating margins are likely to sustain due to the asset light nature of the business.
7) The IPO of GPT Healthcare Ltd will be lead managed by SBI Capital Markets and DAM Capital Advisors (formerly IDFC Securities Ltd). They will act as the book running lead managers or BRLMs to the issue.
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