Singapore-based investment firm Temasek Holding is set to seal its biggest deal in the Indian healthcare sector as it engages in advanced talks with Indian private equity fund True North to buy out its minority stakes in Manipal Hospitals.
“Due diligence has been completed on the proposed transaction and Temasek is close to sealing the secondary buyout. True North is looking to sell its stake of around 18 percent and the deal will value Manipal Hospitals between US$1.3 billion dollars to US$1.5 billion dollars,” according to sources from the Economic Times.
The minority stake is reported to be sold at Rs 1400 crore (about US$215 million), and would pave the way for the Singaporean investment company to eventually take a controlling stake in the Ranjan Pai-led company.
The deal will also allow True North, formerly known as India Value Fund Advisors (IVFA), to finally exit it five-year investment in 2012 for Rs 1000 crore (about US$180 million) that was intended to bankroll Manipal’s expansion in India and overseas.
Since then, Manipal Health has expanded its network to 15 hospitals, including a flagship quaternary care facility located in Bengaluru, five tertiary care, and nine secondary care across five states. It also operates a hospital in Malaysia and manages a clinic in Nigeria.
Following this deal, Temasek will be going on board as a new investor, joining global private equity major TPG who holds a 23 percent stake for its investment of Rs 900 crore (about US$146 million) in 2015 and other backers such as IDFC and Kotak Mahindra PE.
Founded in 1991, Manipal Health is part of Bengaluru-headquartered Manipal Education and Medical Group which claims to be the 3rd largest Indian hospital chain after Apollo and Fortis. It currently operates and manages 4,900 beds, catering to around 2 million customers from India and worldwide every year.
“I cannot comment on any potential secondary share sale traction between existing and any new investor,” Ranjan Pai said. “We are not selling any shares now. We may raise funds in future for acquisition purposes and then all shareholders will get diluted proportionally. But as promoters we are not ceding control now.”
It was earlier reported that TPG is also in talks to increase its shareholding in Manipal. It is said that the private equity major had held discussions to buy a large stake along with mangement control in Fortis Healthcare, while simultaneously holding talks to increase shareholding in Manipal Health with the eventual aim of merging the two.
By Vivian Foo, VCNewsNetwork