Rainbow Children Medicare IPO to open on 27th April

The much awaited IPO of Rainbow Children Medicare will open for subscription on 27th April and it would be a combination of fresh issue and offer for sale. Rainbow Hospital was started in Hyderabad more than 22 years back and has today emerged as a veritable name in child diagnostics apart from gynaecological and obstetrics care.
 

Here are 8 important things you must know about the Rainbow Children Medicare IPO.

1) The Rainbow Children Medicare IPO will open for subscription on 27th April and close for subscription on 29th April, both days inclusive. The company will finalize the anchor placement a day earlier on 26th April. The price band of the IPO has been set at Rs.516 to Rs.542.

2) The IPO will be a combination of a fresh issue and an offer for sale (OFS). Let us look at the OFS portion first. The total offer for sale will be for 2,40,00,900 equity shares which at the upper price band of Rs.542 pegs the OFS size at Rs.1,300.85 crore.

Out of the total OFS of 2.40 crore shares, promoters (Ramesh Kancharla, Dinesh Kancharla and Adarsh Kancharla) will jointly sell 87.26 lakh shares. PE investor, British International Investment PLC (formerly CDC Group) will offload 1.46 crore shares in the OFS.

3) The fresh issue portion will entail the issue of 54,37,984 shares, which at the upper end of the price band of Rs.542, will make the fresh issue portion worth Rs.294.74 crore.

Thus, the overall issue size will entail the issue of 2,94,38,884 shares and at the upper end of the price band of Rs.542, the total issue size will be worth Rs.1,595.59 crore.

The fresh issue funds will be used for early redemption of NCDs, capex for new hospitals and for purchase of medical equipment.

4) The market lot for the issue will be of 27 shares each and the retail investors can invest up to 13 lots of 351 shares valued at Rs.190,242 crore. There will be an employee reservation up to 3 lakh shares and they will be entitled to a discount of Rs.20 per share on the final offer price.
 

5) The basis of allotment will be finalized for the issue on 05-May while the refunds to non-allocations will be initiated on 06-May. The shares are expected to be credited to the demat accounts of eligible allottees by 09-May while the stock is expected to be listed on the stock exchanges on 10-May. The offer will be 50% for QIBs and 35% for retail.

6) Rainbow Children Medicare is multi-specialty paediatrics, gynaecology and obstetrics chain of hospitals. Rainbow offers new-born and paediatric intensive care, paediatric quaternary care, normal & complex obstetrics care, multidisciplinary foetal care and prenatal genetic and fertility care.

Rainbow currently operates 14 hospitals and 3 clinics across 6 cities in India and has a total bed capacity of 1,500 beds. Rainbow also has 602 full-time doctors and 1,686 visiting doctors.

7) For the full fiscal year FY21, Rainbow Children Medicare reported total revenues of Rs.660.31 crore and a net profit of Rs.39.57 crore, implying net margins of 6%. The healthcare business is a capital intensive business with a lot of front-ending of capital and revenue spending.

However, the performance has improved sharply on a 9-month basis for the period ended December 2021. For the 9-month period, Rainbow Children Medicare reported revenues of Rs.774.06 crore and net profits of Rs.126.41 crore, implying a net profit margin of a healthy 16.33%.

For the 9-months ended Dec-21, the net profit is up 228% on a YoY basis compared to the 9-months ending Dec-20.

8) The issue of Rainbow Children Medicare will be lead managed by IIFL Securities Ltd, JP Morgan India and Kotak Mahindra Capital Company, acting as the book running lead managers (BRLM) to the issue. KFIN Technologies (formerly Karvy Computershare) will act as the registrars to the IPO.

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