Peepul Capital co-founder Sandeep Reddy may have found an ally in private equity firm KKR & Co. in his effort to buy out diagnostics firm Medall Healthcare Pvt. Ltd, two people close to the development said.
In a rare instance of a PE fund manager attempting to buy his own portfolio company, Reddy is looking to buy a controlling stake in Peepul-owned Medall, Mint reported on 19 July.
KKR will lend about Rs350-400 crore to Reddy, who is negotiating with Peepul Capital’s global investors, one of the two people cited above said on condition of anonymity. The discussion with KKR is in initial stages, the second person added, also declining to be identified.
Peepul Capital has hired global investment bank Moelis & Co. to find a buyer for Medall.
The debt financing to Reddy will be done through KKR India Credit Opportunities Fund II, the Rs1,100 crore fund KKR raised from family offices and HNIs in India, the first person said. KKR is in the process of raising an additional Rs900 crore for KKR India Credit Opportunities Fund II, which will see a final close at Rs2,000 crore.
The enterprise value of South India-focused Medall is around Rs1,000-1,300 crore, said the second person. Peepul Capital, which has invested around Rs300 crore in the company holds around 80% stake. “With the money Reddy plans to raise from KKR, he can buy a control stake in Medall as he already owns a small minority stake in the company,” said the second person.
Dubai-based buyout fund Abraaj Group was close to buying Medall, but the deal fell through in March. A month later, Reddy decided to go for Medall.
Mails sent to Reddy were not answered while a spokesperson at KKR declined to comment.
The Chennai-based Medall Healthcare is a chain of medical diagnostic service providers. Formerly known as Precision Diagnostics, the chain was acquired in 2009 by Raju Venkataraman, who re-branded it as Medall Healthcare. Through 60 centres across south India, it performs over 3 million tests per year, according to the company website.
KKR has been active in the structured credit space in India, disbursing more than $3.5 billion till date.
Last month, it disbursed Rs500 crore credit to Arun Kumar, founder and chairman of Bengaluru-based pharmaceuticals company Strides Shasun Ltd, for his personal investment vehicle Agnus Holdings Pvt. Ltd.
KKR, which has its interest in healthcare sector in India, had acquired 49% stake in hospital chain Radiant Life Care Pvt. Ltd for $200 million in July. Last year, KKR had given Rs500 crore debt funding to Radiant Life Care Pvt. Ltd which runs BLK Super Speciality Hospital (BLK) in New Delhi and the Nanavati Super Speciality Hospital in Mumbai.
KKR, which has been investing in India since 2006, strengthened its focus on credit financing by hiring B.V. Krishnan as head of capital markets and third party credit investing business in India. Krishnan, a former director at Citigroup, has spearheaded KKR’s lending business in India. KKR has invested approximately $3.2 billion in Indian companies through its private equity business, and has provided more than $3.5 billion of financing to companies through its corporate- and real estate-focused non-banking financial companies (NBFCs) as of 31 March.
Source: Mint