Metropolis IPO a triumph despite regulatory complexity

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Diagnostics chain Metropolis Healthcare completed a 12 billion (US$174 million) initial public offering, debuting at a 9% premium to the issue price of 880 a share. The issue was a secondary sale of shares by Metropolis Healthcare promoter Kanubhai Shah and the company’s private equity investor Carlyle. Shah sold 6.2 million shares, while Carlyle, through its arm CA Lotus Investments, sold 7.4 million shares.

The IPO was 5.8 times covered, receiving bids for 44 million shares against the issue size of 7.6 million shares. The institutional investors’ tranche was covered 8.8 times, and the retail investor book was covered 2.1 times.

“This was one of the first deals after the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR), which replaced the SEBI (ICDR) Regulations, 2009,” said Varoon Chandra, a partner at AZB & Partners, the legal counsel to the book running lead managers.

“The transaction involved complexities with respect to the interpretation of the applicability of the two regulations while drafting the offer documents. Since the draft red herring prospectus was filed under the 2009 regulations, it was extended to the disclosure requirements for the red herring prospectus and the prospectus. However, SEBI ICDR 2018 regulations were applicable for the procedural aspects of the transaction to ensure that the issuer gets the benefits under the new regulation.”

Khaitan & Co was legal counsel to Metropolis Healthcare. The Khaitan team comprised partners Abhimanyu Bhattacharya and Aditya George Cheriyan, principal associate Oishik Bagchi, and associates Aparna Bagree and Devarshi Mukhopadhyay. The AZB team included partners Chandra and Lionel D’Almeida. L&L Partners was the legal counsel to CA Lotus Investments and its team included partners Manan Lahoty and Manshoor Nazki, and associates Varun Baliga and Soumya Cheedi. Sidley Austin was the sole US counsel for the IPO and its team included partners Manoj Bhargava and Ankit Kashyap, and associate Ravina Mahajan.

The bookrunners for the offering were JM Financial, Credit Suisse Securities (India), Goldman Sachs (India) Securities, HDFC Bank and Kotak Mahindra Capital Company.