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Global Hospitals, which has a total of 2,200 beds in four cities, is likely to raise another round of funds from private equity investors, to give an exit route for existing investors.
“We will go for the initial public offering in 2016 after becoming debt free,” Dr Ravindranath, Chairman and Managing Director of Global Hospitals, told Business Line .
The company is in the process of signing a deal (likely with IFC and Sabre Partners) for a private equity investment to raise Rs 200 crore.
“We will utilise Rs 100 crore for reducing the debt burden and the remaining for consolidation of our existing operations. Part of the proceedings would go for expansion within the existing cities,” Ravindranath said.
Everstone Capital and Anand Rathi have invested.
“The cost of finance is very high for the hospital industry. This is an industry where the gestation period is very long that lasts up to 7-10 years. But the cost of interest is up to 15 per cent. You need to have financial instruments to suit this need,” he said.
Global Hospitals is planning to establish hospitals in New Delhi and Kolkata, besides adding smaller hospitals in Mumbai, Chennai, Bangalore and Hyderabad where it runs hospitals now.
The company, however, will go for expansion after cleaning up the balance sheet that is burdened with a total debt of Rs 250 crore. Its turnover stood at Rs 450 crore in 2012-13 as against Rs 320 crore in the previous year. Operating profit, a key parameter for gauging the financial performance of an entity, stood at Rs 45 crore for 2012-13.
“We are expecting this to grow to Rs 100 crore as the turnover is expected to cross the Rs 700 crore this year. This growth would happen through its newer operations in Mumbai,” he said.
The Mumbai facility, which currently houses 100 beds, would have 250 beds in the next two months. About 12 doctors in Mumbai own 26 per cent in the facility, with the rest owned by the company.
Ravindranath’s family and friends own about 60 per cent in the company. Global promoters will still retain majority even after the arrival of the new investors.
kurmanath.kanchi@thehindu.co.in
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