Mumbai: Kotak Pre IPO Opportunities Fund is in advanced discussions to acquire an about 15% stake in Neuberg Diagnostics, a diagnostics chain owned by serial healthcare entrepreneur GSK Velu, said people aware of the development. In this pre-IPO round, the India-focused late-stage fund will likely invest about Rs450 crore in Neuberg.
Velu, who founded Neuberg in 2017 after exiting his investment in diagnostic chain Metropolis Healthcare two years earlier, will use this fund for acquisitions and expand the chain before going for a potential initial public offering next year. He is also the promoter of medical equipment manufacturer Trivitron Healthcare and an investor in the Tamil Nadu-focused hospital chain Kauvery Hospital.
Investment bank O3 Capital is advising Neuberg for the fundraising.
Neuberg chairman Velu declined to comment, while an email sent to Kotak did not elicit any responses.
The Rs 2,000 crore Kotak Pre IPO Opportunities Fund primarily focus on investments in late-stage companies. Investors in the fund include family offices such as Infosys founder NR Narayana Murthy’s Catamaran and Skywalker of the Rubamin group. The fund has made investments in API Holdings (the parent company of PharmEasy), Pine Labs, Mobile Premier League, PB Fintech (Policy Bazaar) and FSN Ecommerce (Nykaa).
Last year, Kotak Fund acquired a 6% stake in India’s largest cardiac stents maker Sahajanand Medical Technologies for Rs170 crore.
Besides Neuberg, Trivitron Healthcare and the stake in Kauvery Hospital, Velu owns Maxivision Eye Hospitals that runs a chain of eye care super specialty hospitals. In 2015, he exited Mumbai-based Metropolis Healthcare by selling his 36.5% stake to private equity investor Carlyle.
Neuberg Diagnostics has operations in India, the UAE, Sri Lanka and South Africa. It performs 5,000 varieties of pathological tests and conducts testing of more than 4 million patient samples and 16 million tests annually, according to the company website.
Last year, Neuberg had completed the merger of Neuberg Supratech Reference Laboratory in Ahmedabad and Neuberg Anand Reference Laboratory in Bengaluru, before the ball rolling for its IPO plans. At the time, the company said the merger would pave the way for Neuberg to launch its IPO by 2024 or 2025.
Another diagnostic chain, Kolkata-based Suraksha Diagnostic, has raised Rs 254 crore from anchor investors ahead of its Rs 846 crore IPO that closed for subscription Tuesday.
In September, Redcliffe Labs raised $42 million from Denmark’s Investment Fund IFU, LeapFrog Investments, HealthQuad and Spark Growth Ventures to meet its expansion plans, focusing on deepening its presence in small cities and towns across India.
The Indian diagnostic services market was valued at $16 billion in 2023 and is forecast to reach $43.57 billion by FY32, as per a report published by Polaris Market Research last year.
India’s diagnostics industry is highly fragmented and the market share of organised players is only around 17%. But the market is growing owing to various factors — increase in healthcare spending by an ageing population, rising income levels and awareness about preventive testing, availability of advanced healthcare diagnostic tests, market penetration of healthcare insurance and measures initiated by the central government, said a CARE Rating report.
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