Indira IVF Hospitals is looking at a valuation of $600-800 million (Rs4,000-5,300 crore), and the promoters may dilute their stake by 10-20%, said the first of the three people, all of whom spoke on condition of anonymity.
Thus, a deal is likely in the range of Rs800-1,000 crore, this person said.
Consulting firm KPMG and the boutique investment bank, o3 Capital, are advising the private equity funds on the transaction, said the second person.
Indira IVF has an Ebitda of around Rs250 crore and is a highly profitable firm, said a fund manager involved in the discussions—one of the three people cited earlier.
Ebitda stands for earnings before interest, taxes, depreciation and amortization.
Indira IVF, founded by Dr Ajay Murdia in 1988 in a two-room clinic in Udaipur, currently has 18 centres across India in cities such as Jaipur, Indore, Nasik, Delhi, Kolkata, Pune, Ahmedabad and Agra.
The proceeds from the share sale will be used by Indira IVF plans to expand its presence to more cities in India, the second of the three people said.
Mails sent to the spokespersons at Indira IVF, Warburg Pincus and KPMG went unanswered.
Spokespersons at TPG Growth, Carlyle and o3 Capital declined to comment.
Indira IVF competes with domestic firms such as Mumbai-based Bloom Fertility Centre, Bengaluru-based Milann, Mumbai-based Morpheus IVF, Nova IVF, New Delhi-based Ridge IVF and Jaipur-based Shivani Fertility and Mother Care.
In-vitro fertilization, or IVF, cycles or the number of IVF processes in India are estimated to rise from an estimated 100,000 in 2015 to 260,000 by 2020, driven by an increase in the number of infertile couples seeking treatment, according to a 2015 report by advisory firm EY.
About 75% of the IVF market in India is captured by the top 500 clinics, comprising of a few corporate chains and leading private clinics, while the rest is held by unorganized players, said the report.
Nearly 10-15% of married couples in India are unable to conceive by natural means and nearly 27.5 million couples who are actively seeking children suffer from infertility, according to the EY report.
“IVF businesses have seen significant interest over the past many years—the segment serves lifestyle issues which have spread across large parts of the urban and semi-urban population," said Sanjeev Krishan, transaction services and private equity leader at PwC India.
By 2020, an increase in the proportion of women in the reproductive age (20-44 years), coupled with a skew towards those aged between 30-44 years, is likely to result in an increase in infertility prevalence, the EY report said.
In another proposed transaction, Japanese financial services firm Orix Corp. is in talks to buy a minority stake in Bengaluru-based fertility clinic chain Nova IVI Fertility, from existing investors Goldman Sachs Group Inc. and New Enterprise Associates (NEA), Mint reported on 12 February.
The Hyderabad-based Nova has 11 fertility clinics across eight cities in India and one in West Asia.
In October, Oasis Centre for Reproductive Medicine, a Hyderabad-based chain of IVF centre, had raised $6.2 million (Rs40 crore) from India Life Sciences Fund II.