ET was
to report first Regarding the deal to sell the Suburban on June 17th.
The development comes amid consolidation in the diagnostics sector and heightened investor interest due to the Covid-19 pandemic, with a new-age online pharmacy company
PharmEasy Is Buying 66% In Listed Diagnostics Chain Thyrocare in June.
According to filings to the exchanges, LPL said it had paid 18.5 times its FY 2012 audited earnings before interest tax depreciation and amortization (Ebitda) of Suburban as the valuation matrix for Suburban. takeover.
The Mumbai-based diagnostics chain, backed by Sequoia Capital, was put on the block earlier this year and received bids ranging from Rs 800 crore to Rs 1,200 crore, as ET reported in June.
Suburban Diagnostics has seen a boom in business since the start of the pandemic last year.
While there has been a decline in other pathological tests, a major increase has been registered in Covid-19 related testing and home collection.
For the financial year ended March 31, the revenue of the suburb stood at Rs 294 crore with EBITDA of Rs 57.5 crore.
LPL in its filing said the deal would be funded through its existing cash reserves.
“The Western India region is a strategic priority for LPL. Suburban Diagnostics is a platform takeover for LPL. A platform to leverage Suburban’s strong consumer and medical brand recognition, extensive network and professional management team, to further accelerate its growth trajectory,” the company said.
This acquisition gives LPL access to 44 laboratories and diagnostics centers (of which one is CAP accredited and five are NABL accredited) and 150+ collection centres.
Suburban Diagnostics founder Sanjay Arora will join LPL as Group Medical Director.
Ernst & Young acted as financial advisor and L&L Partners (formerly, Luthra & Luthra, Law Office) acted as legal advisor to LPL; Avendus Capital and Candle Partners acted as financial advisors and Phoenix Legal acted as legal advisors to Suburban Diagnostics.
in 2012,
Sequoia Capital first invests Rs 40 cr in Suburban And VC Fund has been preparing an exit plan for the past few years. According to an ET report, Suburban had earlier explored several options, including an IPO.
Diagnostic industry has emerged as a lucrative game in India’s growing healthcare sector and is one of the fastest growing service sectors in the country.
The domestic industry is estimated at $9.5 billion and is expected to grow at a compound annual growth rate (CAGR) of approximately 11% over the next five years, largely driven by increased health care spending by an aging population, rising levels of income, Driven by higher awareness. Preventive testing as per HDFC Securities’ March 2021 report.
This segment is currently dominated by high volume and low cost testing activities.
“The market share is classified as unorganized (47%), hospital-based laboratory (37%) while the rest (around 16%) is held by organized players,” the report said.
Doctor referrals are a big part of this business. This includes payment of commission to doctors for referring them to diagnostic labs. Moreover, the disease diagnostics segment is more prevalent than the wellness segment in India.