Four generations of eye doctors from Chennai build $1.5 billion eye care business

Private equity firms TPG and Temasek will comprise the bulk of the OFS.
Private equity firms TPG and Temasek will comprise the bulk of the OFS.

Summary

  • Dr Agarwal's Health Care Limited, under the aegis of chairman Dr Amar Agarwal, is India's largest eye care chain by revenue and number of facilities

Mumbai: In 1994, the Agarwal family launched a ₹4 crore initial public offering (IPO) for Dr Agarwal’s Eye Hospital, with a view towards expanding in Tamil Nadu. Thirty years later, the family is launching a ₹3,027 crore IPO of the holding company next week, which will value both entities at over $1.5 billion ( ₹12,810 crore). This will make the Agarwal family—that will own over 32% of the business after IPO—one of India’s largest dollar millionaires in eye care with an about $500 million stake.

Dr Agarwal's Health Care Limited, under the aegis of chairman Dr Amar Agarwal, is India's largest eye care chain by revenue and number of facilities. The company is launching its IPO on January 29, 2025, which is a mix of a fresh issue of up to ₹300 crore and an offer-for-sale (OFS) of up to 6.78 crore shares, aggregating to ₹3,027.26 crore at the upper band.

Also read |  Dr. Agarwal's Health Care IPO: Is a clearer vision on the horizon?

Post-listing, the promoters will own about 32.5% stake in the entity. Private equity firms TPG and Temasek will comprise the bulk of the OFS with the Agarwals individually selling small stakes each. 

The eye care chain, which was started in 1957 with a single hospital in Chennai, by the late Dr Jaiveer Agarwal and his wife Dr Tahira Agarwal, has been expanded by his son and current chairman Dr Amar Agarwal and four grandsons, to about 209 facilities across India and Africa to date. (Dr Jaiveer's father was also an eye doctor but was not involved in the setting up of the eye care business).

Subsidiary listed first

The company first listed its subsidiary – Dr Agarwal's Eye Hospital on the Bombay Stock Exchange (BSE) in 1994 for expansion in Tamil Nadu. “When we were looking at raising private equity, we wanted to create a structure which will enable them to get an exit…through this (listed) vehicle it would have been difficult," Dr Adil Agarwal, the company's chief executive officer, told Mint. “Using the right consultants and advisors we set up this holding company…all the expansion outside of Tamil Nadu happened at the holding company," he added.

Post-listing the family plans to merge both the entities in the next 12 months, he said.

Also read |  Dr. Agarwal's Health Care IPO: High valuation calls for caution

Dr Amar Agarwal (65), and his sons – Dr Adil Agarwal, the chief executive officer of the company, Dr Anosh Agarwal, the chief operating officer, Dr Ashar Agarwal, chief business officer, and Dr Ashvin Agarwal, chief clinical officer – are all eye surgeons by training in addition to running the family business. The senior Agarwal also ensured his sons secured management degrees to run the business. Dr Adil Agarwal secured an MBA from Stanford Graduate School of Business, Dr Anosh Agarwal holds an MBA from Harvard Business School while Dr Ashar Agarwal has a similar degree from Kellog School of Management.

They are also the fourth generation of the Agarwal family to work in the eye treatment and surgery space, Dr Amar Agarwal told Mint in an interview. “We were told from the age of six months that this is what we had to be…not even doctors, we were told to become eye doctors," Dr Adil Agarwal told Mint, in jest.

Commitment paying off

The family's commitment to eye care is paying off. The eye care services industry in India, valued at ₹37,800 crore in FY24, is growing at a compound annual growth rate of 12-14% between FY24 and FY28, the hospital chain said in a media presentation pre-IPO. This is the fastest growing segment in the single-specialty healthcare space.

Dr Agarwal's has a 25% market share in the organized eye care market, and is 1.7 times larger than its next competitor, ASG Hospital. The eye care services market in India is growing on the back of increasing cataract surgery needs, as well as due to lifestyle-led conditions, like diabetes or spending hours on screens, requiring refractory surgeries, Dr Adil told Mint.

“Another segment is cosmetic…like blepharoplasty, botox surgeries (for wrinkles around the eyes or crow's feet)…this is another segment that is growing," Dr Amar Agarwal added. But these segments do not contribute significantly to the company's revenues. The bulk of the surgeries involve treating cataract.

Also read | Dr Agarwals Eye Hospitals invest over ₹300 crores in Maha to set up hospitals

A key focus for single-specialty chains like Dr Agarwal's is the retention of doctors. “That is how your growth is coming – your doctors are growing their brand and that is how your growth is coming," Dr Agarwal said.

For the eye care chain, holding on its key doctors is not a challenge – the churn rate is less than 2%, the promoters told Mint. It helps that the promoter family and management are doctors themselves, they added. Dr Agarwal's currently has 737 doctors and 1,624 paramedical staff across its facilities in India and Africa.

The company is expanding rapidly in India, which brings in over 90% of its revenues. It opened 45 centers in the FY24, and 30 centers in the first half of FY25, and plans to continue greenfield and brownfield expansion. A portion of the proceeds raised from the fresh issue will be used to fund inorganic expansion, the company's red herring prospectus stated.

Asked if the next generation of the Agarwal family – seven grandchildren across ages 16 to age 2– are also in line to become eye surgeons to carry forward what is now family legacy, Dr Amar said - “we want them to be doing good work, it could mean anything."

 

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