Mumbai: Bhupendra Kumar Modi, chairman of the conglomerate now called Smart Global, is in talks with various hospital chains to sell Saket City Hospitals Pvt. Ltd, said two people familiar with developments.

According to the first person, discussions are on with Manipal Health Enterprises Pvt. Ltd, which runs the chain of super-speciality hospitals in South India, Delhi-based Max Healthcare Institute Ltd and a couple of foreign hospital chains.

The enterprise value of Saket City Hospitals comes to about 1,000 crore, this person added, asking not to be identified.

Modi set up the hospital in 2013. At the time, he invested 300 crore in it. The hospital, at present, has a capacity of 250 beds. Media reports last year said Saket City Hospitals would invest 350 crore to add 350 beds by 2016. Mint isn’t aware of the progress of this expansion.

For 2013-14, Saket City Hospitals recorded a net loss of 14 crore on a revenue of 68 crore. According to the company’s balance sheet for that fiscal, it has total assets worth 243.7 crore and long-term borrowings of 204.8 crore.

Modi and a spokesperson for Manipal Health Enterprises did not respond to emails seeking comment.

A Max India Ltd spokesperson declined comment.

Max Healthcare, which owns a hospital in the same locality—Saket, Delhi—has been interested in the Modi asset for some time and is actively pursuing the deal, said the first person.

Max Healthcare Institute, an equal joint venture between Max India and South Africa-based Life Healthcare, has 12 hospitals in North India, out of which nine facilities are located in and around Delhi and the others in Mohali, Bathinda and Dehradun.

“Many existing hospitals are finding it challenging to keep pace in the competitive scenario for capital—both investment and human. So, hospitals that had earlier been set-up by those with little or no knowledge of healthcare but with the primary motive of philanthropy will be available for acquisition," said Srinivas Baratam, managing director at investment bank Kriscore Financial Advisors.

In May, Max Healthcare Institute acquired a controlling stake of 76% in Pushpanjali Crosslay Hospital (in the national capital region) for an aggregate sum of 287 crore.

Manipal Health Enterprises acquired the 280-bed S.K. Soni Hospital in Jaipur for an undisclosed amount last year.

Manipal Health Enterprises, which has a network of 15 hospitals and three primary clinics, has been scouting more acquisitions. At present, it has about 5,500 beds under its management across cities such as Bengaluru, Salem, Goa, Mangaluru, Visakhapatnam, Vijaywada and Jaipur. Outside India, it indirectly owns and operates a hospital in Malaysia and manages a clinic in Nigeria.

In May, Mint reported acquisition plans of Manipal Hospitals.

“We want to expand our footprint, and acquisition is one of the ways and for good targets, we are ready to spend between 800 and 1,000 crore. We are looking to acquire smaller hospitals but not distressed ones," Ajay Bakshi, chief executive and managing director at Manipal Health Enterprises, had said at that time.

Manipal Health Enterprises plans acquisitions with the backing of its existing private equity investor TPG Capital. In February, TPG Capital invested 900 crore in Manipal Health Enterprises to acquire minority stake.

Other South-India-based hospital chains too are aggressively expanding into other parts of the country. In June, Chennai-based Apollo Hospitals Enterprise Ltd acquired a 51% stake in Guwahati-based 220-bed Assam Hospitals Ltd for 57.25 crore.

“Smaller chains or standalone hospitals that are struggling will seek buyers, as most single-doctor-driven chains have been unable to scale successfully beyond single location or single speciality. Many of these facilities are attractive due to their locations and offer the ability to expand at the same location," Baratam added.

Last month, Mint reported plans of private equity investors Ascent Capital Pvt. Ltd and OrbiMed Advisors LLC to sell their stake in Kerala Institute of Medical Sciences (KIMS), a hospital chain.

According to a 2014 report by professional services firm PricewaterhouseCoopers Ltd (PwC), India’s healthcare infrastructure needs an additional 650,000 beds that will translate into capital investment of 1.65 trillion by 2017.

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