Private equity firm TPG has approached investors to sell its stake in Bengaluru-based Manipal Health Enterprises Ltd, after a proposed promoter buyback of TPG’s stake in the hospital chain stalled, three people with knowledge of the development said.
Manipal founder Ranjan Pai was in talks to raise debt to buy out TPG’s stake. But that plan has been scrapped now.
“The buyback is not happening,” Pai said when reached for comment, without disclosing the reason.
On 16 May, Reorg, a news service for debt investors, reported that Barclays and Deutsche Bank were targeting Asian debt funds to arrange a $500 million three-year loan at an 8.5% interest rate for the promoters of Manipal Health.
TPG first acquired a 24.75% stake in Manipal Health for ₹900 crore in 2015.
In 2017, Singapore government investment firm Temasek Holdings acquired approximately 18% of Manipal Health from PE firms True North and Faering Capital, which valued the hospital chain at an enterprise valuation of $1.14 billion.
Subsequently, in 2021, the Indian quasi-sovereign fund National Infrastructure Investment Fund (NIIF) acquired an undisclosed stake for $286 million.
TPG, which currently holds around 21% of Manipal Health after stake dilution in the previous funding rounds, did not respond to a request for comment.
Over the past two years, Manipal Health has bought out a few hospital chains to expand its presence in India. In April 2021, Manipal acquired Columbia Asia Hospitals for ₹2,100 crore, which took the chain’s total bed count to over 7,000 in India. In July, it acquired Multiples PE-backed Vikram Hospital for ₹350 crore, giving Manipal access to an additional 300 beds.
For the year ended 31 March 2021, Manipal Health reported a loss of ₹138.1 crore on sales of ₹1,813.2 crore, according to VCCEdge, likely because of an adverse impact of covid.
The company has not yet filed its FY22 financial statement with the government.
Investors have been looking to exit their investments in hospital chains as the business looked up after the easing of the pandemic when patients had put off elective surgeries and other treatments because of the fear of contracting covid.
In May, Mint reported that investors had lined up over $2 billion in stake sales across multiple hospital groups.
On 17 August, KKR & Co. sold its stake in Max Healthcare for over ₹9,400 crore, Mint reported. On the same day, Canadian investor Ontario Teachers Pension Plan also acquired Everstone Capital’s stake in Pune-based Sahyadri Hospitals.
“There is a lot of investor interest in hospitals as seen in the recent transactions in single specialty and multi-specialty hospitals. Depending on the scale of operations, historical growth and future potential with strong return metrics, hospital businesses -single specialty and multi-specialty are seeing high investor interest with valuations ranging from 15X to 20X of operating income,” said Gaurav Marathe, India chief executive and managing director at Lincoln International.
