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Manipal Health deal: KKR closes in on Manipal Health deal; begins talks to take control

Global private equity firm KKR & Co has entered into an exclusive arrangement with the financial investors of Manipal Health Enterprises to invest nearly $2.1 billion (around Rs 17,250 crore) to acquire up to 48% stake, valuing the South-based hospital chain above Rs 35,000 crore in potentially the largest private-equity deal in the Indian hospital segment.

Existing private equity investors of Manipal, including TPG Capital, Temasek Holdings and National Infrastructure Investment Fund (NIIF), together own close to 48% in the hospital chain, and they are expected to sell their share, said people aware of the matter. Meanwhile, KKR is also negotiating with the promoters Pai family that holds around 52% stake in the hospital chain to take the control of the firm, although talks with the family are still inconclusive.

The transaction is coming two months after the New York-based private equity firm sold its shares in another hospital chain, Max Healthcare, with over five-fold returns.

As part of the understanding, KKR will acquire a 21.5% stake from TPG and another 18% from Temasek Holdings. It also entered into an exclusivity pact with NIIF to buy 8% from India’s state-sponsored investor.

ET Bureau

Buyout giants such as KKR & Co and Singaporean sovereign fund Temasek Holdings are the frontrunners to buy a 21.5% stake in Manipal Hospitals from the existing investor TPG Capital, ET first reported on September 20.

When contacted, spokespersons with Manipal, KKR and Temasek declined to comment, while mails sent to TPG and NIIF did not elicit any response.

TPG invested $146 million in Manipal in 2015 and was the first to start a formal process to exit its exposure in Manipal. Temasek and NIIF were not that keen to exit at that time, but decided to pare their stakes as the valuations were attractive, said one of the persons mentioned above.

NIIF had invested Rs 2,100 crore to acquire about 8% stake in Manipal Hospitals through its Strategic Opportunities Fund in April last year.

The Pai family had been in talks with banks including Barclays, Deutsche Bank, DBS, Nomura and Standard Chartered to raise $400-500 million as it sought to buy back the shares held by TPG, ET had reported in July.

TPG is also selling its stake in Care Hospitals where a handful of strategic and private equity investors including Blackstone, CVC Capital, Temasek and Max Healthcare are vying to acquire the ownership in a deal worth $1 billion, ET reported in September.

The Manipal group has nearly 8,700 beds across 28 hospitals, and was exploring a public offer. In November 2020, it acquired the Indian assets of Columbia Asia Hospitals for around Rs 2,100 crore and in June 2021, it bought out Bengaluru-based Vikram Hospital from Multiples Private Equity for around Rs 350 crore.

Manipal Health is expected to post an Ebitda of Rs 1,400 crore in FY23 on revenue of Rs 7,000 crore, said sources.