Manipal Hospitals, backed by Singapore state investor Temasek, is close to acquiring Kerala-based hospital chain KIMS Health for ₹3,500-4,000 crore, two people familiar with the development said. Manipal intends to buy the stake held by True North, which invested $200 million in KIMS Group in March 2017.
Discussions are in advanced stages, and an announcement is expected soon, the people cited above said on condition of anonymity. Founded in 2002, KIMS, short for Kerala Institute of Medical Sciences, is a network of hospitals offering quaternary care in India and the Middle East.
“The founders of the company are also looking to exit through the deal. It is likely to be a complete sale,” one of the two people cited above said. The founders are led by founder chairman and managing director Dr. M.I. Sahadulla. The stake sale comes after KIMS deferred plans for a public market listing after the stock markets turned volatile.
On Monday, Singapore state investor Temasek announced the acquisition of a 41% stake in Manipal Health for $2 billion, raising its stake to 59%. The deal values the 7,700-bed hospital chain at ₹40,000-42,000 crore. After the deal, Manipal Group will hold 30% of the hospital chain, while TPG to re-invest in an 11% stake through its new fund, TPG Asia VIII. With the transaction, TPG, which has sold its Manipal stake to Temasek, has made a 10x return from its seven-year-old investment.
According to a May 2021 rating statement by ICRA, as on 31 March 2021, Condis India Healthcare Private Pvt. Ltd (a vehicle for True North) holds a 61.06% stake in KHML, and the remaining 38.94% stake is held by individual shareholders. The latest stakeholding by True North could not be ascertained.
Manipal Hospitals has beaten bids from other strategic and financial investors such as Blackstone, Temasek’s Sheares and Max. If the deal goes through, this will be Manipal Group’s third acquisition after AMRI Hospitals and Columbia Asia.
KIMS Health and True North did not respond to emailed queries. Manipal Group founder and managing director Ranjan Pai declined to comment.
“Manipal Hospitals has taken a pole position in the deal,” the second person quoted above added.
The KIMS Health website says it has 2,000 beds across cities such as Thiruvananthapuram, Kollam, Kottayam and Perinthalmanna in Kerala. It also has a presence in Bahrain, Oman, Saudi Arabia, Qatar and the United Arab Emirates.. It operates two medical centres and one nursing college in Thiruvananthapuram.
KIMS Health earned ₹519.1 crore in revenue in FY21 against ₹667.3 crore in FY20, and a profit after tax of ₹172 crore in FY21, as per its annual report.
After the AMRI acquisition is approved, the total number of beds for Manipal Group will cross 9,000, and if KIMS is also integrated, the combined entity will be India’s largest hospital chain, with more than 10,500 beds, ahead of Apollo Group.