Mumbai: The TPG Capital and Manipal Health Enterprises combine is in talks to buy a majority stake in hospital operator Medanta from heart surgeon Naresh Trehan and other investors, two people close to the development said. “While the discussions are still on and it is yet to submit a bid, Manipal-TPG is likely to offer a valuation of ₹ 6,000 crore for Medanta," one of the two people said, requesting anonymity.
TPG-Manipal is the only party that is actively pursuing Medanta after Malaysia’s IHH Healthcare Bhd withdrew its non-binding bid following its acquisition of the hospital business of crisis-ridden Fortis Healthcare Ltd in July, outbidding TPG-Manipal. IHH submitted a bid for Medanta, valuing the firm at around ₹ 5,700 crore, Mint reported on 20 March.
“TPG has been actively looking to build up Asia Healthcare Holdings—its healthcare platform. Medanta’s acquisition will help the private equity firm diversify its healthcare investments," the second person said, seeking anonymity.
US-based private equity fund Carlyle Group owns 27% in Gurugram-based Medanta, while Singapore’s Temasek Holdings Pte holds 18%. Trehan, his family and Medanta co-founder Sunil Sachdeva own the rest.
In 2013, Carlyle Group acquired a 27% stake in Global Health Pvt. Ltd, which owns, manages and operates Medanta, while Temasek bought its 18% stake in Global Health in 2015 from Punj Lloyd Ltd.
US-based TPG Capital has sharpened its focus on healthcare investments in India since 2016. Its healthcare portfolio in the country includes Cancer Treatment Services International; Bengaluru-based Rhea Healthcare Pvt. Ltd, the operator of hospitals for women and children under ‘Motherhood’ brand; and Sai Life Sciences, a drug discovery and manufacturing firm.
Both TPG and Manipal spokespersons declined to comment.
In an emailed response, a Medanta spokesperson said: “We do not comment on market speculation and rumour."
An email sent to Carlyle did not elicit any response.
Medanta, founded in 2009, operates hospitals and clinics across cities including Gurugram, Lucknow, Indore, Ranchi and Sri Ganganagar.
The hospital chain has been under pressure because of price controls imposed by National Pharmaceutical Pricing Authority (NPPA), the drug pricing regulator. In August 2017, NPPA capped the prices of knee implants, reducing product prices by as much as 70%. The regulator had brought cardiac stents under price control in February to make them affordable. The price of drug-eluting stents was slashed to about ₹ 30,000 from as much as ₹ 2 lakh, hurting revenues of hospitals in India.
Mint reported on 20 March that Medanta also saw a decline in its revenue after several of its top doctors quit to join rivals such as Fortis and Max Healthcare Ltd.
Carlyle also plans to sell its investment through the transaction, the people cited above said.
Even as the volume of exits in the healthcare sector has dropped, the ticket size of transactions has gone up.
According to a report by EY, there were eight exits worth $577 million in the six months ended 30 June compared with 17 worth $408 million in the year earlier period. Private equity and venture capital investments in the sector have also risen.