KKR, Temasek Vie For Care Hospitals; Deal Likely At $1 Bn

TPG-backed Quality Care India Ltd, which runs the hospital chain, has also shortlisted two other private equity giants Blackstone and CVC Capital Partners, a second person said, who also asked to remain anonymous.

Care Hospitals, Temasek, TPG and Blackstone declined to comment. KKR, Max Healthcare and CVC Capital did not respond to requests for comment.

Care Hospitals, founded in 1997 by cardiologists Dr B. Soma Raju and Dr N. Krishna Reddy and their associates in Hyderabad, runs 17 centres across six states, according to the company.

TPG impact platform TPG Rise’s unit Evercare Group acquired Care Hospitals in 2019 from Abraaj Healthcare Fund, after the latter wound up its operations following a probe into Abraaj Capital founder Arif Naqvi for misappropriation of investor capital. At the time, Abraaj Capital owned a little more than 87% stake in Care Hospitals. It isn’t clear if TPG acquired the balance 13% stake in Care as well.

Care Hospitals posted net sales of $211 million and earnings before interest, taxes, depreciation, and amortization (Ebitda) of $47 million in fiscal 2021-22, Mint reported in July, citing Vishal Bali, the hospital chain’s chairperson.

Revenue is expected to grow 15-29% this financial year, Bali said at the time.

Care Hospitals has been on the acquisition mode in recent months. In July, it took a ‘significant majority’ stake in Aurangabad-based United Ciigma Hospital, its third such deal since April. Care Hospitals chief executive Jasdeep Singh said at the time that the acquisition was part of the chain’s strategy to deepen its presence in fast-growing tier-2 markets.

Should either KKR or Temasek clinch the deal, the American buyout investor and Singapore state investor might each be in a position to trigger a consolidation in the Indian hospitals sector as KKR and Temasek have also emerged as contenders for Ranjan-Pai led Manipal Health.

Mint reported on Thursday that KKR and Temasek are in separate and advanced talks to acquire TPG and National Investment Infrastructure Fund (NIIF’s) stake in Manipal Health Enterprises Ltd.

Mint also reported that KKR and Temasek are in talks to acquire Ranjan Pai’s stake in the business though Pai has said that he has no intention of stepping down at the moment.

TPG has a 21.52% stake in Manipal Health Enterprises, while Temasek owns 18.13% and NIIF holds a 8.45% stake with the promoter group led by Ranjan Pai owning 50.4% stake.

Such a consolidation is, however, premature to consider at the moment, said the second person cited above.

The hospital segment has seenstrong investor interest in the aftermath of rebounding growth since covid.

In August, Canadian fund Ontario Teachers’ Pension Plan bought a significant majority stake in Pune-based Sahyadri chain of hospitals. Also, investors General Atlantic and Kedaara Capital acquired a combined 46% stake in ASG Eye Hospitals in July.

ranjani.raghavan@livemint.com