SRL Diagnostics, a subsidiary of listed parent Fortis Healthcare which is backed by Malaysia’s IHH and its private equity investors, are in advanced discussions with Kotak Mahindra Capital, ICICI Securities and Morgan Stanley to shortlist the three as advisors for the diagnostic firm’s proposed initial public offer (IPO), multiple industry sources in the know told Moneycontrol.
On February 15, Moneycontrol was the first to report that SRL Diagnostics had initiated discussions with investment banks to prepare for a listing.
“Post the pitches, SRL Diagnostics and its investors Jacob Ballas and IFC are in advanced discussions with Kotak Mahindra Capital, ICICI Securities and Morgan Stanley. These three i-banks are likely to come on board for the IPO,” one of the persons cited above said.
Two other persons confirmed the names of the above i-banks as front-runners for the deal.
All three persons above spoke to Moneycontrol on the condition of anonymity.
Moneycontrol is awaiting the response to email queries sent to Fortis Healthcare, Jacob Ballas and IFC and has sent reminders. This article will be updated once we hear from the parties.
Kotak Mahindra Capital and Morgan Stanley could not be reached for an immediate comment. When contacted, ICICI Securities declined to comment.
The promoter group of SRL Diagnostics holds 57.68 percent stake while the bloc of private equity investors, which includes NY Jacob Ballas and the World Bank's development finance arm IFC and others, hold 31.52 percent.
Earlier this week, SRL announced the acquisition of NCR-based Lifeline Laboratory to accelerate its growth and geographic presence.
The SRL strategy
Moneycontrol’s report of February 15 added that the key trigger for the SRL Diagnostics IPO, which is likely to mainly consist of an OFS or offer for sale component, was to facilitate an exit for the private equity investors.
No final call had been taken on the size of the IPO and the timing, but according to early indications, the plan is to mop up around Rs 2,000 crore, the report elaborated.
IHH Healthcare's open offer for Fortis Healthcare has been stalled since 2018 with Japanese drugmaker Daiichi Sankyo challenging the deal. On September 22, The Supreme Court continued with the stay on the IHH open offer as it directed the Delhi High Court to consider the issue.
Also read: Fortis Healthcare shares drop 20% as Supreme Court orders status quo on IHH deal
The share prices of the listed peers of SRL Diagnostics such as Metropolis Healthcare, Dr Lal Path and Thyrocare have dipped in the last three months with a switch from Covid-19 volumes to the pre-Covid era.
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