Cloudnine plans last funding round ahead of IPO

Private equity (PE) investors backed maternity hospital chain Cloudnine, which has raised over $100 million till now, is planning its last funding round by early next fiscal.

Thereafter , the company may list the business on the bourses or look for other possibilities.

The company has so far raised funds from PE firms like Matrix Partners, Sequoia India and TrueNorth in the last six years.

For its last round, Cloudnine will raise funds through a combination of primary and secondary transactions and, will also see a new PE firm coming on board.

Rohit M A, co-founder and managing director, Cloudnine Group of Hospitals, told DNA Money that the company is quite well-funded to achieve expansion for the next year. "There is huge inbound interest from investors of all formats consistently. However, we may open up to the possibility of raising another investment round in the early quarters of the next financial year. This will possibly be our last round of investment before being able to take the route of going public or exploring other opportunities at that time," he said, adding the company has developed financial discipline and corporate governance to be able to take those routes.

The investment in the next round, he said, may involve a combination of early investors exiting, recent investors re-investing and opportunity for a new investor to also come into the company.

Set up in 2007, the hospital chain currently operates across 19 locations and is targeting over Rs 400 crore in revenues in this fiscal. It is currently present in cities including Bangalore, Chennai, Pune, Mumbai, Gurgaon and Chandigarh. It will add three projects in Noida and Delhi regions, all of which will get operational in the next calendar year.

At 1,000 babies every month, the hospital chain has so far delivered 50,000 babies and its services are focused on women and child only and comprise fertility, ante-natal, maternity, neonatology, pediatrics and gynecology. The company claims to be consistently achieving over 40% compounded annual growth rate (CAGR) over the last four years.

"This has been possible as more of our units start reaching gestation and we continue our ramp up on adding more units. We will stay on the path of being able to add four to five units every year for the next two years. Our focus will be to establish a presence deeper in the northern, western and southern regions of India. We are in the process of developing our east India strategy and should be ready to set foot with a deployment matrix in the next year, which will yield operational results only after 2019," he said.

Elaborating on the hospital chains expansion plans, including inorganic opportunities, he said, "Our plan will be to deploy in each year four to five units (hospitals) in all identified locations across north, west and south India. There are very scattered inorganic opportunities, but not very exciting at this stage, though we continue to engage with prospects. If some of them compose, there may be an opportunity to scale our presence even faster."

The company is also mulling international expansion. "We are contemplating the prospect of reviewing overseas opportunities, particularly in the neighbouring countries and Gulf Cooperation Council, it's really a combination of mental bandwidth that we can probably afford more than anything else. Right now we are all about the India story," he said.