After exiting Blockbuster Max, KKR now at the forefront to enter IPO bound Manipal Hospital

 After exiting Blockbuster Max, KKR now at the forefront to enter IPO bound Manipal Hospital

Manipal Group, which has around 8,000 beds in 28 hospitals, is expected to be listed on Dalal Street in the next 1-2 years and is on a consolidation drive.

After selling its remaining 27.5 per cent stake in Max Healthcare in August for over Rs 9,000 crore, the biggest ever block deal by a private equity firm in India, KKR is close to making its next big bet in the Indian healthcare sector. , 

The US private equity giant is gearing up for a proposed entry into Manipal Health Enterprises, the country's second largest hospital chain, multiple industry sources with knowledge of the matter told Moneycontrol. 

“KKR has gone ahead of other private equity suitors and is in advanced stage of talks to buy TPG Capital's stake in Manipal Health Enterprises. TPG is now in exit mode and looking for returns after spending 7 years in the firm,” said one of the above persons. 

A second person told Moneycontrol that an exclusivity agreement was signed between KKR and TPG and the former was the prime contender to buy the stake and bag the deal. 

“KKR has got a punchy exit from Max Healthcare on a spurious evaluation and hence they are well prepared to do another deal in the hospital sector. He has proved his mettle in this segment." 

Both the individuals mentioned above spoke to Moneycontrol on condition of anonymity. 

When contacted, KKR and TPG declined to comment. Moneycontrol has sent an email query to Manipal Group, but did not get any immediate comment from them. 

On March 15, Moneycontrol had reported that the promoter group of Manipal Health Enterprises is in talks to raise funds and buy back a partial stake from TPG and a partial exit to the private equity giant ahead of the proposed listing. Those discussions did not ultimately result in a transaction. 

Max Healthcare chairman and managing director Abhay Soi (who held 23.09 per cent stake as of the quarter ended June 2022) and KKR were earlier co-promoters of the firm. Soi is now the sole promoter following the exit of the US private equity firm.

 In 2018, KKR acquired shares in Max Healthcare along with Radiant Life Care. In September 2021, KKR sold 84.4 million shares of Max Healthcare through the block deal route for Rs 2,956 crore. Later, KKR sold an additional 10 per cent in Max Healthcare for around Rs 3,300 crore in March. In the domestic healthcare and pharma sector, KKR also supports listed firm JB Chemicals & Pharmaceuticals.

TPG health story 

TPG Capital bought a significant minority stake in the Ranjan Pai-led hospital chain for Rs 900 crore in February 2015. The leading global investment firm holds around 21 per cent stake. Singapore's Temasek holds 18 per cent stake, NIIF (National Infrastructure Investment Fund) holds 8 per cent while the rest is with the promoter family. 

As part of its Indian portfolio, TPG also supports Care Hospitals, Motherhood Hospitals and infertility chain Nova IVF. 

Back in January 2022, Moneycontrol was the first to report that nearly three years after it took over the management of hospitals and clinics that had previously been managed by a fund from the failed private equity firm Abraj, TPG-backed Evercare Hyderabad-based Care Hospitals. Was looking to get out. 

Running in Manipal Hospital? 

Manipal Group, which has around 8,000 beds in 28 hospitals, is expected to be listed on Dalal Street in the next 1-2 years and is on a consolidation drive. In November 2020, it acquired the Indian assets of Columbia Asia Hospitals for approximately Rs 2,100 crore and later in June 2021, it acquired Bengaluru-based Vikram Hospitals from Multiple Private Equity for approximately Rs 350 crore. 

According to reports, it is also said to be close to acquiring the AMRI hospital chain in Kolkata from Emami Group. In August 2022, Manipal Hospitals MD and CEO Dilip Jose told The Times of India that the firm was planning more acquisitions in locations such as NCR, Kerala and Hyderabad. 

Hospital M&A in the pink of health and happiness! 

The home hospital space is buzzing with bargain activity as the economy slowly recovers from the effects of COVID-19. 

Here is a snapshot of all the M&A action in this segment since the beginning of the year, closely tracked by Moneycontrol: 

On 20 September, Moneycontrol reported that Dr Azad Moopen-led healthcare group Aster DM Healthcare had engaged Moelis and Credit Suisse as consultants to unlock value through an internal riging exercise, including its Middle East and would involve dividing India's business. 

On September 3, Moneycontrol broke the story of private equity firm True North, which was looking to exit Kerala's Kimshealth, after listing plans were put on hold. 

Canadian pension fund Ontario Teachers Pension Plan Board (OTPPB) recently announced that it has acquired a significant majority stake in Sahyadri Hospitals from Everstone Group. 

On July 12, Moneycontrol was the first to report that OTPPB was the lead suitor in the sale process of Sahyadri Hospitals. 

Recently Arpwood Capital also announced the acquisition of Sterling Hospitals, the largest hospital chain in Gujarat. 

On 4 April, Moneycontrol reported that private equity investors were looking to exit the north-focused super specialty hospital chain Asian Institute of Medical Sciences.