Samara-backed medical devices firm SMT, More Retail prepare for IPOs

Private equity firm's planned listings come as it continues focus on mid-market buyouts

Sahajanand Medical Techn­ologies (SMT), an Indian cardiovascular device maker backed by private equity firm Samara Capital, is preparing for an initial public offering (IPO) worth around Rs 1,500 crore, said two top executives of Samara. 

In a separate deal, Samara Capital and American retail giant Amazon are planning to take their grocery joint venture More Retail public in the next financial year beginning April 1, according to people close to the matter. 

“This company (SMT) is heading for an IPO. We are inviting banker pitches shortly,” said Abhishek Kabra, managing director of Samara Capital in an interview. 

Surat-based SMT is the country’s largest stent manufacturer and the second largest in the cardiovascular devices market. It counts Samara Capital, Morgan Stanley Private Equity Asia and Kotak Mahindra as investors. The IPO process will begin after financial pitches by investment bankers — a step expected next week — with a draft red herring prospectus (DRHP) filing targeted for May or June, according to Kabra. 

SMT’s share dilution will depend on valuation, which will be assessed after banker presentations, he said. 

SMT products include coronary and renal stents, PTCA balloon catheters (used for blocked coronary arteries) and other cardiac accessories. It manufactures in Gujarat and a research and development centre in Ireland. 

Separately, Samara Capital is preparing More Retail, an omni-channel grocery retailer, in which it is an investor alongside Amazon, for a potential listing in the next financial year. 

Going back to 2019 when we started evaluating and investing, the company was on its path to profitability. In 2021, the company was about Rs 100 crore of Ebitda, despite the pandemic, which was a big boost initially beca­use people stocked up; they bought more from the offline formats (brick and mortar),” said Kabra. 

The Mumbai-based retailer has developed technology to drive cost efficiency, scalability, and adaptability in a competitive market, according to Kabra. The company’s integration with Amazon Fresh boosted “execution precision”, enabling it to give customers like two-hour deliveries and extensive product selection. The company, however, is not competing in the quick commerce segment (10-minute delivery). 

More Retail scaled up the integration model through pilot programmes over three years and then implemented it across 800 stores and 40 dark stores, according to Abhik Mitra, managing director, Samara Capital. Of these, 250 stores are integrated with Amazon, with plans to expand it to 400. 

According to executives, the partnership with Amazon Fresh has fuelled 80 per cent year-on-year growth in the grocery segment. While More Retail does not operate in the 10-minute quick commerce space, it has seen strong growth in its core grocery business. It has had a 20 per cent annual increase in offline sales and a surge in customer engagement through its loyalty programme, which has more than 1.5 million members. The company has strategically repositioned itself as a neighbourhood grocer with a strong omnichannel presence, leading to the closure of large-format hypermarkets. 

“We are the only omni-channel focused, profitable grocery player. No other grocery chain is profitable and no other grocery chain has an omni-channel presence like what we have. We are growing through both the engines,” said Kabra. 

The planned listings come as Samara Capital continues its focus on mid-market buyouts in health care, financial services and consumer retail. The company is bullish on India’s investment climate, noting that private market valuations have remained relatively stable despite corrections in public markets.

 

“So for the first time, we had witnessed a stark difference almost to the tune of 30 per cent to 50 per cent variation in terms of where private deals were happening versus public deals, and that's one of the reasons why you would see a lot of IPOs, because of valuation arbitrage that existed,” said Kabra. “Now, I think that froth has come down and got corrected, which is great from a long-term standpoint and health of the Indian capital market ecosystem.”

 

Samara and Amazon acquired More Retail from the Aditya Birla group.