Singapore government-owned fund Temasek Holdings has acquired India’s leading hospital chain Manipal Health Enterprises by owning about 59% stake. Temasek-owned Sheares Health, which held 18% stake in Manipal, has acquired an additional 41% stake from the promoters and existing investors. The deal has valued the hospital chain at Rs40,000 crore ($5 bn) of enterprise value, said multiple people aware of the development.
Post transaction, stake held by Manipal Health promoter Ranjan Pai & family will be reduced to 30% while stake owned by existing investor TPG will be 11%. The Pai family, which founded India’s first privately owned medical college in Karnataka’s Manipal town in 1953, held 52% stake in the entity.
Existing private equity investor of Manipal – TPG Capital Management has sold 11% stake from their 22% stake while other investor National Infrastructure Investment Fund (NIIF) has fully exited by selling their 8% stake in the hospital chain, said sources.
An official announcement is expected by next week.
Temasek Holdings will raise its stake in Manipal Health Enterprises to about 51% from the current 18%, making it the largest investor in India’s biggest hospital chain, ET first reported in January.
Temasek has pipped global private equity firm KKR & Co who had plans to acquire up to 48% stake in the South-based hospital chain. KKR was also negotiating with the promoters Pai family for buying out a minority stake and ending up owning about 52% stake, ET reported in October.
Mails sent to Manipal, TPG and NIIF did not elicit any response while a Temasek spokesperson declined to comment.
TPG invested $146 million in Manipal in 2015 and was the first to start a formal process to exit its exposure in Manipal. NIIF had invested Rs 2,100 crore to acquire about 8% stake in Manipal Hospitals through its Strategic Opportunities Fund in April last year.
Recently, Manipal Health Enterprise acquired the Kolkata-based AMRI (Advanced Medical Research Institute) Hospitals, in a deal worth Rs2400 crore, and is waiting for approval from the West Bengal government. The WB government owns about 2% stake in AMRI.
The buyout of AMRI will add another 1,200 beds to the Manipal group’s hospital portfolio, taking the total number to about 9,500 beds. At present, it has nearly 8,300 beds across 28 hospitals.
Manipal Health is also the top contender to acquire about 70% in KIMS Health Management, Kerala’s leading hospital chain from private equity investor True North. Once the KIMS Kerala deal materialises, Manipal Health will become the largest hospital chain in India with 10,800 beds.
Manipal Health has been expanding its footprints across the country through multiple buyouts.
In 2020, Manipal Health had acquired the Indian assets of Columbia Asia Hospitals for around Rs 2,100 crore and in June 2021, it bought out Bengaluru-based Vikram Hospitals from Multiple Private Equity for around Rs 350 crore.
The hospital industry is expected to post occupancy levels of 62-64 per cent in FY23 and FY24 backed by continued healthy demand for elective surgeries, recovery in medical tourism to pre-Covid levels and continued market share gains for organised players, said rating agency ICRA in a January report.
Improving payor mix, growth in surgery volumes, price revisions by companies to offset cost inflation and faster throughput in discharges are expected to aid healthy growth of 8-10% in average revenue per occupied bed (ARPOB).
A 2020 Human Development Report showed that India ranked 155th in bed availability with five beds and 8.6 doctors per 10,000 people. India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years with an investment of $245 billion, said a PWC report.
