Kotak fund invests Rs 940 cr in IPO-bound diagnostics chain Neuberg

Neuberg Diagnostics, promoted by GSK Velu, is planning to use the pre-initial public offering fundraise to boost its merger and acquisition ability

In the largest-ever primary fundraise in the Indian diagnostics sector, Chennai-based superspecialty diagnostics chain Neuberg Diagnostics has secured an investment of Rs 940 crore from Kotak Fund to support its inorganic expansion across the country.

 

Neuberg Diagnostics, promoted by GSK Velu, is planning to use the pre-initial public offering (IPO) fundraise to boost its merger and acquisition (M&A) ability. It is also looking at expansion in the areas of personalised medicine, integrated diagnostics, and inorganic growth strategy.

 

Talks were reportedly on between the two players for picking up around 15 per cent stake in Neuberg, with the company valued between Rs 6,000 crore and Rs 7,000 crore. The company did not divulge further details about the deal, including the existing shareholding of Neuberg Diagnostics. The investment was made by Kotak Strategic Situations India Fund II, which is managed by Kotak Alternate Asset Managers (Kotak Alt). o3 Capital acted as the exclusive financial advisor to Neuberg Diagnostics for the fundraise from Kotak Alt.

 

Interestingly, India’s largest diagnostic chain Dr Lal PathLabs had raised Rs 638 crore, third-largest chain Metropolis Healthcare Ltd Rs 1,204 crore, and Thyrocare Technologies Ltd Rs 479 crore through their respective IPOs.

 

“We are thrilled to announce that Neuberg Diagnostics has secured an investment from Kotak Alt, marking a significant milestone in our journey toward becoming one of the largest diagnostics chains of Indian origin. This funding will enable us to enhance our capabilities in the areas of personalised medicine and integrated diagnostics, and inorganically expand our footprint across the country. As we prepare for an IPO, we remain committed to making high-quality diagnostics accessible to all, ensuring that our services continue to meet the evolving needs of clinicians and patients,” said Velu, founder and managing director (MD) of Neuberg Diagnostics.

 

Rahul Shah, partner at Kotak Alt, said: “We are excited to partner with Neuberg Diagnostics as they work to transform the diagnostics landscape in India. The investment reflects our confidence in Neuberg’s vision and potential. We are confident that this strategic investment will play a key role in increasing the scale of Neuberg Diagnostics and help the company get ready for their upcoming IPO. This investment solidifies our commitment to supporting quality healthcare solutions that improve patient outcomes and accessibility.”

 

Neuberg Diagnostics, founded in 2017 and headquartered in Chennai, has rapidly emerged as the leading integrated diagnostics player in the country and one of the top four diagnostics providers of Indian origin. It has an extensive network spanning over 10,000 touchpoints, and over 250 labs across as many cities.

 

Velu had reportedly said that the company had raised around Rs 1,000 crore in 2023-24 (FY24). However, data accessed by BS Research Bureau indicates that its revenue was Rs 551 crore, with a net loss of Rs 44 crore in FY23. This was compared to a revenue of Rs 111 crore and net profit of Rs 25 crore in FY22.

 

Neuberg ranks as one of the top two genomics players in India and holds a leadership position in newborn screening and reproductive genomics testing. The company is the first-of-its-kind in India to set up dedicated centres of excellence, covering modalities across genomics, proteomics, metabolomics, transplantation immunology, haemato-oncology, and histopathology. Kotak Alt, a part of Kotak Mahindra Group, focuses on alternate asset management and investment advisory businesses.

 

In the recent past, Neuberg had made several acquisitions, including those of Bengaluru-based Anand Diagnostics, Ahmedabad-based Supratech Micropath, Pune-based AG Diagnostics, and Chennai-based Ehrlich Lab.