Entero Healthcare Solutions files for IPO, fresh issue component at Rs 1,000 crore

On September 13th, Entero Healthcare Solutions, an OrbiMed-backed distributor of medical supplies, filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI).

An additional 85.57 lakh equity shares are being offered for sale by 19 selling shareholders, including promoters Prabhat Agrawal, OrbiMed Asia III Mauritius, and Prem Sethi, for a total of Rs 1,000 crore.

OrbiMed Asia III Mauritius, a subsidiary of the American healthcare-focused investment group OrbiMed, owns 58.70 percent of the company's stock, while Prabhat Agrawal and Prem Sethi, respectively, possess 11.38 percent and 6.46 percent.

The second largest stakeholder is the Prasid Uno Family Trust, which holds a 20.04 percent ownership in the company through the trusteeship of Surbhi Singh and Universal Trustee.

The Mumbai-based firm might potentially raise up to Rs 200 crore through a private placement, preferential allocation, or rights issue before submitting the red herring prospectus to the ROC.

The primary uses for the Rs 123.7 crore in debt repayment and the Rs 600 crore in long-term working capital requirements would be funded by the net proceeds from the fresh issue. Acquisitions and other forms of inorganic expansion, as well as ordinary company expenses, will consume the remaining money.

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Entero Healthcare, formed in 2018 by Prabhat Agrawal and Prem Sethi with backing from OrbiMed, reports an operating income of Rs 2,522.07 crore in FY23 and positions itself as one of the top three healthcare products distributors in India based on revenue in FY22.

The distributor serves retail pharmacies and hospitals across India through its 73 distribution centers and its IT network. More than 81,400 retail and more than 3,400 hospital customers were served in fiscal 2023, a significant increase over the 64,200 retail and 2,500 hospital customers served in FY22.

In addition, it has supply agreements with more than 1,900 healthcare product manufacturers, giving it access to more than 64,500 product SKUs.

According to its historical fiscal reports, Entero Healthcare is a loss-making organization, with a net loss of Rs 11.1 crore for the year ended March FY23, decreasing from a loss of Rs 29.44 crore, despite a 31 percent year-over-year increase in revenues to Rs 3,300 crore.

The issue's merchant bankers are ICICI Securities, DAM Capital Advisors, Jefferies India, J.M. Financial, and SBI Capital Markets.

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