General Atlantic, TPG set to mint money via IPO-led partial exits

 General Atlantic, TPG set to mint money via IPO-led partial exits

US growth equity investment firm General Atlantic will score stellar returns by selling half its stake in multi-speciality hospital chain Krishna Institute of Medical Sciences Ltd (KIMS) via its initial public offering next week.

KIMS has set a price band of Rs 815-825 per share for its IPO that opens on June 16 and closes two days later. The anchor book for institutional investors will open on June 15, the company said Friday.

General Atlantic, which is the largest shareholder in KIMS with a 40.91% stake, is selling 16 million shares in the IPO that will fetch about Rs 1,320 crore ($180 million) at the upper end of the price band.

The PE firm will stand to make 2.7 times returns from the partial exit on its blended cost of investment three years ago. This translates into an internal rate of return (IRR), or annualised return, of 38-40% in rupee terms, show The Capital Quest’s estimates.

PE and venture capital firms typically chase about 20-30% returns in local currency terms.

The PE giant had announced a $130-million investment in the healthcare services company in 2018 via a combination of primary capital infusion and secondary purchases.

After the IPO, General Atlantic will own a 19.66% stake after factoring the fresh issue of shares by the company at the upper end of the price band.

KIMS is seeking a valuation of Rs 6,601 crore (about $905 million) via the IPO that will see 32.5% stake dilution.

The IPO comprises a fresh issue of shares worth Rs 200 crore and a secondary market sale of 22.56 million shares. At the upper end of the price band, the IPO size is pegged at Rs 2,143 crore ($293 million).

KIMS received regulatory nod to float an IPO in April-end. It had filed its draft IPO proposal in March.

KIMS will join listed peers Apollo Hospitals Enterprise Ltd, Fortis Healthcare Ltd, Narayana Hrudayalaya Ltd, and Max Healthcare Institute Ltd on stock exchanges.

The company was incorporated in 2004. It now operates one hospital each in nine cities of the southern Indian states of Andhra Pradesh and Telangana. The group has a total capacity of 3,000 beds.

Kotak Mahindra Capital Co, Axis Capital, Credit Suisse Securities (India), and IIFL Securities are merchant bankers arranging and managing the share sale.

Dodla Dairy

TPG Growth, the mid-market and growth equity platform of private equity firm TPG Capital, is poised to score neat returns by selling nearly two-thirds of its stake in India’s Dodla Dairy Ltd via an IPO.

Dodla Dairy’s IPO also opens on June 16 and closes two days later. It has set a price band of Rs 421-428 per share.

TPG, which owns 15.03 million shares or 25.77% stake, is selling 9.2 million shares for nearly Rs 394 crore. The PE firm had earlier proposed to sell 8.3 million shares four months ago.

The investment will score two times returns on its blended cost of investment four years ago. This translates into an internal rate of return (IRR), or annualised return, of 18-20% in rupee terms, show The Capital Quest’s estimates.

TPG Growth, which is invested through The Rise Fund, will own 5.83 million shares, representing a 9.8% stake, in Dodla Dairy after factoring in fresh shares to be issued in the IPO.

TPG’s Rs 320-crore investment in Dodla Dairy was the largest PE deal in India’s highly fragmented dairy sector at the time.

Hyderabad-based Dodla Dairy is seeking Rs 2,546 crore (about $350 million) in valuation through next week’s IPO.

The Rs 520-crore IPO comprises a fresh issue of shares worth Rs 50 crore, besides the secondary share sale. TPG, Dodla Deepa Reddy, Dodla Sunil Reddy and the Dodla Family Trust will cumulatively sell 10.98 million shares in the IPO.

Dodla Dairy was founded by members of the Dodla family, led by Dodla Sunil Reddy. This is its second attempt to go public; the first was in August 2018. It abandoned that attempt due to market volatility.

A successful IPO will make Dodla Dairy the second-largest listed dairy company in India behind Hatsun Agro Products.

ICICI Securities and Axis Capital are merchant bankers arranging the share sale.

Kwality Ltd and Mother Dairy Fruit & Vegetable Pvt. Ltd dominate the market in northern India while Hatsun and Tirumala lead in southern India. Britannia Industries Ltd and Nestle India are among the other firms in the market.

The segment also comprises large co-operative players such as Gujarat Cooperative Milk Marketing Federation, which sells its products under the Amul brand.

The Capital Quest