Kotak Pre-IPO Opportunities Fund Eyes 15% Stake in Neuberg Diagnostics for INR 450 Cr

Founded in 2017 by serial healthcare entrepreneur GSK Velu, Neuberg Diagnostics has steadily grown its footprint across India, the UAE, Sri Lanka, and South Africa.

Kotak Pre-IPO Opportunities Fund is reportedly in advanced talks to acquire a 15% stake in Neuberg Diagnostics for approximately INR 450 crore.

This significant pre-IPO funding round will aid Neuberg in its plans for strategic acquisitions and expanding its operations ahead of a potential initial public offering (IPO) slated for next year, according to sources familiar with the development.

Founded in 2017 by serial healthcare entrepreneur GSK Velu, Neuberg Diagnostics has steadily grown its footprint across India, the UAE, Sri Lanka, and South Africa.

Velu, who previously divested his 36.5% stake in Metropolis Healthcare to private equity firm Carlyle in 2015, is also the promoter of Trivitron Healthcare and an investor in Kauvery Hospital.

Fundraising to Strengthen IPO Plans

The INR 2,000 crore Kotak Pre-IPO Opportunities Fund focuses on late-stage companies with strong growth potential.

It has previously invested in leading firms like API Holdings (parent company of PharmEasy), Pine Labs, Policy Bazaar, Nykaa, and Mobile Premier League. Investment bank O3 Capital is advising Neuberg on this fundraising initiative.

While Velu declined to comment on the development, and Kotak did not respond to queries, the infusion of funds is expected to strengthen Neuberg's IPO plans, which could materialize by 2024 or 2025.

The company previously merged its operations in Ahmedabad and Bengaluru last year, a move aimed at simplifying its structure and accelerating its public offering timeline.

A Growing Presence in the Diagnostics Sector

Neuberg Diagnostics is a prominent player in the highly fragmented Indian diagnostics market, which is valued at $16 billion (2023) and projected to reach $43.57 billion by FY32, according to Polaris Market Research.

The company conducts over 16 million tests annually and offers 5,000 varieties of pathological tests.

In an industry where organized players hold only 17% of the market, Neuberg’s efforts to consolidate and expand its operations position it as a key contender in the evolving healthcare landscape.

Kotak’s Commitment to Healthcare Investments

Kotak Fund’s investment in Neuberg aligns with its recent healthcare sector activity. Last year, it acquired a 6% stake in Sahajanand Medical Technologies, India’s largest cardiac stent manufacturer, for INR 170 crore.

Neuberg is not the only diagnostic chain making headlines. Kolkata-based Suraksha Diagnostics recently raised INR 254 crore from anchor investors ahead of its INR 846 crore IPO. Redcliffe Labs secured $42 million in funding to strengthen its presence in smaller Indian cities and towns.

The Indian diagnostics market is witnessing robust growth due to increasing healthcare spending by an aging population, rising income levels, awareness of preventive testing, and advancements in diagnostic technology.

Other factors, such as greater healthcare insurance penetration and government healthcare initiatives, are also contributing to the sector’s expansion, according to a CARE Ratings report.

With this fresh infusion of capital from Kotak Pre-IPO Opportunities Fund, Neuberg Diagnostics aims to solidify its position in the diagnostics sector, both in India and globally.

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