Neuberg Diagnostics in talks with 360One, M&G Investments for $100 million pre-IPO funding round: Report

Diagnostics chain Neuberg Diagnostics is in talks with a consortium of investors, including funds managed by 360One and foreign investor M&G Investments, to raise up to $100 million, Moneycontrol reported on Monday, citing people in the know.

The news portal reported earlier that the company had appointed investment bank o3 Capital to help Neuberg raise funds from private investors.

The company will use the proceeds raised from this funding round prior to its initial public offering (IPO) to reinforce its merger and acquisition (M&A) bid as it eyes to become one of the largest diagnostic chains in India before hitting Dalal Street next year, as per the report. The company is backed by promoter GSK Velu, who was an investor in Metropolis Healthcare, a diagnostics chain.

GSK Velu reportedly sold his 36.5 per cent stake in Metropolis Healthcare to private investor Carlyle in 2015. The promoter also has a stake in Trivitron Healthcare and is an investor in the Tamil Nadu-focused hospital chain Kauvery Hospital.

A fund managed by 360One invested nearly $70 million in Kauvery Hospital in March 2023. In June 2024, Murugappa Group’s TI Clean Mobility, the three-wheeler EV maker, announced that it would raise ₹310 crore from M&G Investments, the report stated.

In 2023, M&G also announced that it will invest $75 million in Vivriti India Retail Asset Fund, which aims to expand and improve access to finance for underserved small and medium enterprises (SMEs) segment, and millions of low-income households across India, with a focus on women-owned SMEs, according to the report.

Neuberg is one of India's major diagnostic service providers, with a presence not just in India but also in the United Arab Emirates, South Africa, and the United States, as per the report.

The chain is equipped to perform 5,000 varieties of pathological investigations and provide multiple health checkups ranging between ₹1,000 and ₹8,500. The group reportedly performs more than 20 million tests every year at 33 labs in India and abroad.

The company's is in the run-up for its planned IPO. Last year, it merged Neuberg Supratech Reference Laboratory, Ahmedabad, and Neuberg Anand Reference Laboratory, Bengaluru, with the parent company to streamline operations, according to the report.

The company also formed a 50:50 joint venture (JV) with Pulse Diagnostics, a Kolkata-based diagnostic chain to expand its footprint in East India.

Deals in Diagnostics:

Major M&A deals in the diagnostics space include Dr Lal PathLabs acquiring Suburban Diagnostics in 2021, an all-cash deal for the enterprise value of ₹925 crore.

The West Bengal-based Suraksha Diagnostic Pvt Ltd filed its draft red herring prospectus with the Securities and Exchange Board of India to raise nearly $100 million through an IPO. The chain's private investor, OrbiMed, is looking to sell a large part of its stake through a public offer, as per the report.