Kedaara Capital to sell stake in Vijaya Diagnostic Centre via IPO

The IPO comprises a sale of 35.68 million shares by the promoter and Kedaara

Homegrown private equity firm Kedaara Capital is looking to sell the bulk of its stake in Hyderabad-based diagnostics company Vijaya Diagnostic Centre through its proposed initial public offering (IPO).

Vijaya Diagnostic, which is promoted by Dr S Surendranath Reddy, filed its draft prospectus with the Securities and Exchange Board of India (SEBI) for an IPO that is entirely a secondary market sale.

The IPO comprises a sale of 35.68 million shares by the promoter and Kedaara. The public offering would result in a 35 per cent stake dilution on a post-issue basis, as per the draft prospectus.

The IPO size is pegged at Rs 1,000 crore ($137 million).

Kedaara, which invested about Rs 405 crore in the company via multiple tranches starting December 2016, is selling 30.58 million shares. This is around three-fourths of its 40 per cent stake.

It will fetch an estimated Rs 850 crore from the stake sale. This means Kedaara would pull out about 2.8-2.9 times its blended cost of investment across tranches and an annualised return of 24-26 per cent in rupee terms excluding dividend income.

Kedaara would continue to own about 10 per cent stake after the IPO that would see Vijaya Diagnostic join listed peers Dr Lal PathLabs, Metropolis Healthcare and Thyrocare Technologies.

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