India’s largest private equity fund ICICI Venture has sold its 30% stake in Hyderabad based hospital chain Krishna Institute of Medical Sciences to rival General Atlantic for Rs 850 crore, making close to four-fold returns on its initial investment in four years, two people with direct knowledge of the sale told ET.
“Yes, ICICI Venture has exited, but we don’t know the value,” Bhaskar Rao, chief executive, KIMS, confirmed to ET in a mobile phone text message. “The money is not coming to KIMS.’’
The stake sale to General Atlantic values KIMS at around Rs 2,700 crore, up from Rs 850 crore in 2014.
General Atlantic and ICICI Venture did not respond to ET queries.
ICICI Venture had invested about Rs 220 crore in 2014 in the hospital chain, which had around 500 beds.
It helped expand and was waiting to exit through a public offer this year. KIMS, which received the SEBI approval for a public offer, had to put its share sale plan on hold due to regulatory changes and pricing uncertainty.
“We foresee sector revenues growing at a strong 15% annually over the next three fiscals (2018-20), led by rapid expansion in health insurance coverage through government-sponsored schemes,’’ rating agency Crisil had said in a report released in December 2017. “The number of people covered by health insurance has nearly doubled to 42 crore in the past three fiscals and the government remains focused on enhancing access to affordable healthcare.’’ The ratings agency expects large corporate chains, with more than Rs 400 crore in revenue to increase capacity by 25% between FY2018 and 2019 through investments of Rs 5,000 crore.
“Higher volume growth, primarily from a larger aging population, urbanisation, rising affordability of private healthcare services, and steadily increasing bed capacity in under-penetrated areas are helping draw local business houses, foreign PE funds and hospital chains to acquire existing hospital services companies,” says a Goldman Sachs report.
Malaysia’s sovereign fund Khazana-backed IHH (Asia’s biggest hospital chain), American private equity fund TPG Capital-backed Manipal Hospitals, and a consortium of billionaires led by Sunil Munjal and the Burman family of Dabur have bid aggressively for Fortis Healthcare, which has been put on the block.
ET reported in April that Max Healthcare owner and billionaire Analjit Singh is in talks to purchase the South African partner Life Healthcare Group Holdings’ 47.5% stake in hospital chain Max Healthcare for $450-540 million.
“India hospitals offer higher growth, but at lower return ratios than other Asia hospitals,” brokerage Goldman Sachs wrote in a research note in February this year.
