Rainbow Hospitals to Come Out with Rs.2,000 Crore IPO

Rainbow Hospitals, one of India’s foremost multi-specialty paediatric hospital chains, has filed the draft red herring prospectus (DRHP) with SEBI for a Rs.2,000 crore IPO. The IPO will comprise of Rs.280 crore raised via fresh issue and an offer for sale of 2.4 crore equity shares by promoters and early investors. The indicative size of the IPO is Rs.2,000 crore.

The much smaller new issue portion of Rs.280 crore will be utilized to fully repay the non-convertible debentures (NCDs) of the company and also to invest in new hospital as well as in advanced medical equipment. The OFS portion is largely intended to provide an exit to early shareholders and also to list the company on the bourses. The listing will also help the company leverage its equity as currency for its inorganic growth plans in future.

Rainbow established its first multi-speciality 50-bed hospital in Hyderabad in the year 1999. Subsequently, it has expanded in a substantial manner. It currently has a portfolio of 14 hospitals as well as 3 clinics which hare spread across 6 Indian cities. Its total paediatric hospital capacity runs to 1,500 beds in all.

Rainbow Hospitals is backed by Commonwealth Development Corporation (CDC) which is a development financial institutional and an investor in global businesses. It is based out of UK. This investment gives a stamp of global approval for the business and CDC will be one of the entities participating in the OFS of Rainbow Hospitals.

Rainbow has over the years established its expertise in handling complex paediatric problems. It handles new-born and intensive paediatric care, multi-specialty paediatric services including paediatric multi-organ transplants. The Rainbow Hospitals also has a separate specialization in Obstetrics and gynaecology, apart from fertility care.

The SEBI approval normally takes about 2 to 3 months since the filing of DRHP, after which the IPO process starts. Kotak Mahindra Capital, JP Morgan and IIFL Securities will be the book running lead managers (BRLM) to the issue.

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