CX Partners eyes 3-fold return from Thyrocare IPO

Private equity firm CX Partners is likely to reap a return of 3X (three times) over its four-year-old investment in diagnostics major Thyrocare Technologies. According to people in the know, the $500-million fund will dilute 25 per cent of its 27 per cent stake in Thyrocare Technologies, which is likely to launch its initial public offer (IPO) in February 2015. While Thyrocare is expected to be valued at Rs 1,800-2,000 crore during the IPO process, CX Partners’ 25 per cent stake sale could fetch it Rs 450-500 crore. According to sources, Axis Bank, JM Financial, Edelweiss and ICICI Securities are in the race for the IPO mandate.  CX Partners, launched by former India head of Citi Venture Capital International (CVCI) Ajay Relan, had acquired a 30 per cent stake in Thyrocare in 2010 for Rs 188 crore, at a valuation of Rs 626 crore. Last year, it sold a three per cent stake to ICICI Bank for about Rs 40 crore.  

Besides CX Partners, another PE investor - Norwest Venture Partners - holds a 10 per cent stake in Thyrocare, which it had bought in 2012 for Rs 120 crore. The remaining 60 per cent stake is held by founder and chairman A Velumani. An e-mail questionnaire sent to CX Partners’ Ajay Relan did not elicit any response till the time of going to press.  

“I have no plans to dilute additional stake in Thyrocare as there is no shortage of funding. The IPO is floated for making an exit for PE investors,” said Velumani.  If the IPO materialises, Thyrocare will be the first diagnostic company to be listed in India. Thyrocare, with revenue of Rs 160 crore, controls less than four per cent market share of the organised diagnostic sector in India. Super Religare Laboratories (SRL), the largest pathology lab chain in the country, had withdrawn its IPO prospectus in 2011. SRL, founded by Malvinder and Shivinder Singh, did pre-IPO placements with two PE players after filing its draft red herring prospectus or DRHP.