Cloudnine files for an IPO, to raise around Rs1,200 crore

11 Feb 2022 , 02:42 PM

Bengaluru based Leading Super specialty mother and baby care chain, operating under the Cloudnine brand, offering end-to-end coverage of all stages of the parenthood journey has filed its draft red herring prospectus (DRHP) for its initial public offering (IPO).

The issue with a face value of Rs5 per equity share consists of a fresh issue of equity shares worth up to Rs300 crore and an offer-for-sale (OFS) of up to 13,293,514 equity shares by existing shareholders.

As per market sources, the company looks to raise around Rs1,200 crore.

Dr. Kishore Kumar Rajagopal, Scrips ‘N’ Scrolls India Private Limited, True North Fund V LLP, Indium V (Mauritius) Holdings Limited, and Sequoia Capital Investment are among the key shareholders selling in the IPO. The offer also includes a reservation for a subscription for eligible employees.

The proceeds from its fresh issuance worth Rs95 crore for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company, Rs117.90 crore for setting up seven new Mother and Baby centres at various locations over the next few years, Rs12.71 crore for acquisition of 49% stake in its subsidiary, Acquity Labs Private Limited besides general corporate purposes.

In line with its motto #WeKnowMoms, Cloudnine was founded by Dr. Kishore Kumar and Mr. Rohit MA, started its first centre in Bengaluru, Karnataka in 2006, with a vision to establish world-class mother and baby care focused medical care facilities. It owns, operates and manages a network of 23 centres across six states and one union territory in India, with an aim to provide its customers with memorable experience and access to advanced facilities. It currently follows a concentric cluster approach focusing on two key regions, the NCR (National Capital Region) and Bengaluru, Karnataka.

As a value proposition it has various celebratory elements in its packages for customers such as special baby showers, candle light dinners before the expected delivery date, exclusive gift hampers for mother and baby.  Cloudnine centres are thoughtfully designed vibrance and colour as a reflection of the celebratory nature of the parenthood journey it assists its customers with.

As at September 30, 2021, its had a team of 1,480 medical professionals, including 196 junior doctors and 1,284 nurses and held medical records of more than 7.6L customers. In FY21 it had assisted in 16,801 deliveries and 5,994 fertility services.

Cloudnine provides expectant mothers bespoke care with quality medical expertise, medically-advanced facility infrastructure and a bespoke motherhood journey covering most of their needs, offering end-to-end coverage of all stages of the parenthood journey, beginning with fertility treatments, through maternity, neonatology and paediatrics, dedicated to the holistic well-being of mother and baby and is the only healthcare facility chain in India which is a part of the Vermont Oxford Network (VON).

To increase customer engagement, the mother and babycare chain recently launched Momeaze, an expert curated ecommerce marketplace for all maternity and child related products. As on September 30,2021 its platform has hosted over 2k SKUs and between the months of April to September 2021 it has recorded an avg of 39000 sessions per month. It also has cloudninemamas.com an active community accessible to its customers via a mobile application where queries are addressed by Cloudnine experts.

For the six months ended September 30, 2021 revenue from operations grew 42.80% to Rs371.65 crore against Rs260.26 crore the same period a year ago. Despite the pandemic, KCILs revenue from operations grew 7.42% to Rs554.59 crore for the fiscal 2021 when compared to Rs516.30 crore for the fiscal 2020. This was primarily due to increase was on account of higher deliveries.

While the EBITA has remained positive over the last 3 fiscals, as the depreciation is high the company reported restated loss which as decreased by 46.14% from 18.29 cr in six months Sept 30,2020 to Rs9.85 crore in six months ended Sep 30,2021. Additionally, as on September 30,2021 it generated Rs217.70 crore out of its total revenue of Rs260.26 crore from its mature centres. In FY 21 the mature centres generated a revenue of Rs491.62 crore. The ROCE for six months ended 30 September, 2021 stood at 10.05% and for fiscal 2021, it was in a negative territory of 0.10%.

As per the Crisil Report stated in its DRHP, the total addressable market for private maternity healthcare in Fiscal 2020 was Rs20,800 crore and projected to grow at CAGR of 11% to 12% from Fiscal 2021 to Fiscal 2026 to reach Rs26,100 crore in Fiscal 2026.The market is expected to grow on account of increased penetration of institutional deliveries, the rising share of private hospitals in rural and urban areas, increase in the expenditure on maternity healthcare, and rise in the treatment costs on account of delayed deliveries.

JM Financial Limited, ICICI Securities Limited and Axis Capital Limited are the book running lead managers to the issue.