Global private equity major Blackstone will invest about $1 billion (₹8,300 crore) to acquire controlling stakes in two leading South Indian hospital chains – Hyderabad-based CARE Hospitals and Kerala’s KIMS Health to emerge as the fourth largest hospital group in India. The multi-phased, twin transactions also mark the debut of the world’s largest PE fund in India’s fast-growing healthcare space.
Blackstone has completed the acquisition of about 73% stake in Quality Care India Ltd (QCIL), the holding company which owns CARE Hospital chains for around ₹6,640 crore ($800 million) from Evercare, a platform of TPG RISE funds, the fund announced on Monday. TPG Rise funds will continue owning about 25% stake in QCIL.
This transaction has been fraught with controversies after rival bidder Max Healthcare Institute moved Bombay High Court in late April against Touch Healthcare, Quality Care India, and the Evercare Group management for an alleged breach of contract after its offer to acquire Care Hospitals was turned down. However, in July the court-appointed arbitrator rejected Max’s claim.
After taking control of CARE Hospitals, Blackstone and TPG, in turn, have jointly used it as a vehicle to sign a definitive agreement for the acquisition of a majority stake of 80% in Kerala’s leading hospital chain KIMS Health, buying out the entire 61% stake of True North, a home-grown private equity investor. However, KIMS will continue to operate under the leadership of promoter Dr. M. I. Sahadulla who will retain about 20% stake in the chain.
“Over the past two decades, our institutions have played an important role in providing accessible healthcare with quality, patient safety, and ethical practice for patients in India and abroad,” said Dr. M. I. Sahadulla, Founder, Chairman and Managing Director of KIMS Health.
The enterprise valuation of CARE and KIMS is about ₹11,000 crore, inclusive of the debt on their books. Blackstone is planning to cumulatively invest about ₹8,300 crore for their controlling interests in both transactions. In KIMS, Blackstone has invested around ₹2,490 crore ($300 million) while TPG has put in around ₹830 crore ($100 million).
The addition of KIMS to the CARE Hospitals network will create one of India’s largest hospital platforms with 23 facilities across 11 cities in India, added the press release.
Following KIMS buyout, the joint entity will own about 4,000 beds, and fourth largest hospital group in India.
“CARE Hospitals and KIMS are trusted brands in the Indian healthcare space with a reputation of prioritizing patients and have a track record of excellence in medical ethics and clinical outcomes. We aim to build a patient-centric hospital platform focused on high clinical care quality and top-notch service,” said Ganesh Mani, Managing Director at Blackstone Private Equity.
“We believe there is significant potential in creating a market leading platform through both organic and partnership-driven consolidation efforts, which is evidenced in our proposed association with KIMS,” said Ankur Thadani, Partner at TPG.
