'Will merge our two entities post-listing': Dr. Agarwal's Health Care CEO on Rs 3,027 cr IPO

India, which has the highest number of visually impaired people in the world, faces huge shortage of eye care specialist. Nearly 1 out every 5 persons in India faces some form of visual impairment, which stood at 275 million as of 2020, closely followed by China at 274.3 million, according to the International Agency for Prevention of Blindness (IAPB) report mentioned in the IPO document of Dr. Agarwal's Health Care.

India right now has only 1.8-1.9 ophthalmologists for every 100,000 people, while the actual requirement is approximately 8-9 per 300,000 people, says Dr. Adil Agarwal, Whole-time Director and CEO of eye care services provider Dr. Agarwal's Health Care, who has more than 10 years of experience in the eye care services industry.

“This shortage poses a significant challenge to meet the growing demand for eye care services in India. So, for us to serve this market effectively, we're going to require more doctors, more ophthalmologists. This is the biggest challenge,” Dr. Adil Agarwal says in an interaction with Fortune India.

According to him, the sector is the fastest-growing segment in healthcare, with a CAGR of 11-15% over the last five years and is projected to grow at a CAGR of 12-14% over the next four years till FY28. The size of the Indian eye care services industry was ₹37,800 crore in the financial year 2024, and is projected to grow to ₹55,000-65,000 crore by FY28.

He said that the Chennai-based company has launched 13 new hospitals in the last six months, while 45 hospitals were added in the financial year 2023-24. “We believe this trend will continue because there is huge opportunity for us to expand in India’s eye care market,” says Dr. Adil.

“The company employs around 700 ophthalmologists, and as we continue to expand our network, we will need more quality doctors,” he adds.

As of March 31, 2024, Dr. Agarwal’s Health Care runs a total network of 209 eye hospitals across India and Africa, with 193 in the country and remaining 16 in nine different countries in Africa. The company generates 65% of its revenue from surgeries, primarily cataract surgeries, and 13.5% from optical product sales.

Dr. Agarwal's Health Care, backed by private equity firms TPG and Temase, looks to raise ₹3,027 crore at a market value of ₹12,698 crore at the upper end of the price band of ₹382 to ₹402 per equity share. The three-day IPO will open for subscription on January 29, 2025, while the tentative date for listing of stock on the BSE and NSE is February 5, 2025.

Post listing, Dr. Agarwal's Health Care plans to merge its listed subsidiary, Dr Agarwal Eye Hospital, with the parent company. “The plan is to merge both entities within three years through a share swap,” reveals Dr. Adil.

Dr. Agarwal’s Health Care is the parent company of Dr Agarwal's Eye Hospital, and currently holds 72% stake in the listed arm.

“Our endeavor is to merge both and operate as one entity… Fundamental difference between these two entities is most of the old legacy hospitals based out of Tamil Nadu are in the listed subsidiary, whereas all the other centers outside of Tamil Nadu, and the African operations are located in the holding company,” says Dr. Adil Agarwal.

The IPO of Dr. Agarwal's Health Care is a mix of a fresh issue of 0.75 crore equity shares worth ₹300 crore and offer for sale of 6.78 crore shares amounting to ₹2,727.26 crore by the promoter and other selling shareholders. Out of the ₹300 crore proposed equity issue, the company intends to use ₹195 crore for repayment of its certain borrowings, while remaining capital will be used for general corporate purposes, and unidentified inorganic acquisition.