Healthcare product distributor Entero Healthcare Solutions, supported by OrbiMed, has submitted its draft red herring prospectus to SEBI on September 13 for an initial public offering (IPO). The IPO comprises a fresh issuance of shares worth Rs 1,000 crore by the company and an offer-for-sale (OFS) of 85.57 lakh equity shares by 19 selling shareholders, including promoters Prabhat Agrawal, OrbiMed Asia III Mauritius, and Prem Sethi.
OrbiMed Asia III Mauritius, a corporate promoter owned by the US-based healthcare-focused investment firm OrbiMed, holds a 58.70 percent share in the company, while individual promoters Prabhat Agrawal and Prem Sethi own 11.38 percent and 6.46 percent, respectively. The second-largest shareholder is the Prasid Uno Family Trust (through trustees Surbhi Singh and Universal Trustee), which owns a 20.04 percent stake.
The company may consider raising Rs 200 crore through private placement, preferential allotment, or rights issue before filing the red herring prospectus with the ROC.
The net proceeds from the fresh issue will mainly go towards repaying debts of Rs 123.7 crore and fulfilling long-term working capital requirements of Rs 600 crore. The remaining funds will be used for inorganic growth initiatives through acquisitions and general corporate purposes.
Entero Healthcare, founded in 2018 by Prabhat Agrawal and Prem Sethi, claims to be among the top three healthcare product distributors in India in terms of revenue in FY22, reporting an operating income of Rs 2,522.07 crore in FY23.
The company, a distributor of pharmaceuticals and medical devices with a customer base of retail pharmacies and hospitals, boasts a pan-India network of 73 warehouses and advanced technology infrastructure. In fiscal year 2023, it served over 81,400 retail customers and over 3,400 hospital customers, a significant increase from 64,200 retail customers and 2,500 hospital customers in FY22. It also has supply relationships with over 1,900 healthcare product manufacturers, providing access to over 64,500 product stock-keeping units (SKUs).
Despite robust revenue growth, Entero Healthcare has reported losses in past fiscal years. In FY23, it recorded a net loss of Rs 11.1 crore, narrowing from a loss of Rs 29.44 crore, while revenue increased by 31 percent year-on-year to Rs 3,300 crore during FY23.
ICICI Securities, DAM Capital Advisors, Jefferies India, JM Financial, and SBI Capital Markets are serving as merchant bankers for the IPO
