Integrated Diagnostics Holdings (IDH), an Egypt-based healthcare diagnostics service provider, is targeting a value of around $600 million from its planned listing on the London Stock Exchange, a source familiar with the matter said on Tuesday.
It is the latest firm from the Middle East to choose the UK bourse for a flotation in recent years, avoiding more restrictive regulatory regimes for listing closer to home and, in the case of Egypt, political turbulence which has had a major economic impact.
Up to 45 percent of IDH could be listed, should an up to 15 percent over-allotment option be exercised, in an initial public offering expected to complete in February, the company said in a statement.
IDH, created by a 2012 merger of Al Mokhtabar and Al Borg Laboratories, offers pathology and molecular diagnostics, genetics testing and basic radiology in Egypt, Jordan and Sudan, and it operated 283 laboratories as of Sept. 30.
Earnings before interest, tax, depreciation and amortisation (EBITDA) in the first nine months of 2014 was 265.6 million Egyptian pounds ($37.2 million).
The deal was pre-marketed with a number of potential investors at the end of 2014 and the feedback was positive enough to launch the IPO now, a traditionally quiet time for listings, the informed source said, speaking on condition of anonymity as the information is not public.
Firms often avoid January for IPOs, preferring to wait until they have full-year earnings. Recent market volatility linked to concerns over oil prices and sluggish euro zone growth has affected many companies' flotation plans. Some have announced deals now to avoid competition in coming months as the backlog clears.
Among them are German cable operator Tele Columbus and Dutch eyewear retailer GrandVision.
Shares being sold in the IDH offering are being provided by private equity firm Abraaj Group and founding shareholders, who currently own 38.72 percent and 40.28 percent respectively.
The remaining 21 percent is held by private equity firm Actis, which bought its holding from Abraaj in December.
Private equity has been the main driver of Middle Eastern firms listing in London, including Gulf Marine Services, Al Noor Hospitals and NMC Health, as regulation makes it difficult to partially exit investments in many other markets.
Egypt's economic picture has been improving since the election in May 2014 of former general Abdel Fattah al-Sisi as president brought in a period of stability.
But the Arab world's most populous state still faces numerous issues hindering economic growth, such as frequent power cuts, while investment in stocks has been deterred by uncertainty over the availability of hard currency to repatriate profits.
Deutsche Bank and EFG Hermes are arranging the IDH offering.