Diagnostic chain Metropolis mulls $230 million IPO

Managing Director Ameera Shah is looking to raise the profile of the diagnostic chain as the Mumbai-based company scouts for takeover targets

Metropolis Healthcare, an operator of medical diagnostic centers backed by Carlyle Group LP, is considering an initial public offering (IPO) to raise about Rs 15 billion ($230 million) as it seeks acquisitions.

The sale will likely include a partial stake held by the founders as well as new shares, Managing Director Ameera Shah, said in an interview. A time frame for the offering has not been set and the company hasn't appointed an adviser for the sale, she said.

Shah is looking to raise the profile of the diagnostic chain as the Mumbai-based company scouts for takeover targets. Growing affluence in India and an increasing number of people taking health insurance are spurring demand for private medical services and giving companies such as Metropolis an edge over standalone test centers.
 

“The key driving factors for growth for Metropolis would be test-menu expansion and center expansion,” Shah said on Monday, citing additions of tests such as one for diagnosing breast cancer. “We are also witnessing substantial growth in the preventive and wellness segment.”

Listing of Metropolis's shares will provide a “stock currency” that can be used to fund acquisitions, Shah said.

Shah said she will use proceeds from the sale of shares held by the family to repay debt taken to buy out a private equity investor about three years ago. The business was set up by Sushil Shah, Ameera Shah’s father, in 1981 as a single-laboratory clinic.

Companies such as Dr Lal PathLabs and Thyrocare Technologies have benefited from demand for private medical diagnostic services. Revenue at Dr Lal PathLabs, which operates a national laboratory and centers across the country, more than doubled in the four years through March 2017. Metropolis, which currently operates 2,000 centers, has plans to add 700-800 more in the financial year started April 1 to enhance its footprint in India, according to Shah.