Mumbai: The hospital deal between Fortis Healthcare Ltd and Manipal Health Enterprises Pvt. Ltd faced several hurdles and underwent multiple changes over the last 18 months, said Puneet Bhatia, co-managing partner and country head, TPG Capital, at the Annual Mint India Private Equity Conclave on Wednesday.

The top brass of Fortis Healthcare, Manipal Health and private equity firm TPG Capital Asia met 18 months ago to lay the foundation for the largest deal in the Indian hospital sector, he said.

The deal went through numerous changes, but Bhatia was undeterred.

“Two days ago, when we were on verge of signing up, my team sent me an update on the financial model and a PowerPoint presentation. It said version 334. You can imagine the kind of alterations the deal has gone through," Bhatia recalled.

Calling TPG Capital an “elephant hunter", Bhatia said it is the firm’s policy to carefully narrow down and curate deals it wants to pursue—the main reason why it stood by the deal despite several extraneous factors that posed hurdles.

“It (the deal) is still not settled and we have to jump through multiple hoops, but this is the first big milestone," he added.

On Tuesday, the board of Fortis announced the sale of its hospital assets to Manipal, backed by TPG.

Apart from hospital assets, Fortis’ board also approved the sale of 20% stake in SRL Diagnostics.

As part of the proposed transaction, Manipal promoter Ranjan Pai and TPG Capital will invest Rs3,900 crore in Manipal Hospital.

The transaction faced several headwinds, both legal and regulatory.

“These events were landmarks. There were a number issues which we knew were there but we cannot ever anticipate how they will reflect on the deal," Bhatia said.

On 31 August, the apex court refused to permit the Singh brothers, former Ranbaxy Laboratories Ltd promoters, selling their stake in Fortis Healthcare. It also refused permission to banks with whom the Singh brothers had pledged Fortis shares to do the same. They were further restrained from disposing of any of their assets (encumbered and unencumbered) till the final disposal of the case.

Again, in a rare instance, the Delhi high court on 31 January allowed Japanese drug major Daiichi Sankyo to enforce a Rs3,500 crore award decided by a Singapore arbitration tribunal in April 2016 against former Ranbaxy promoters Malvinder Mohan Singh and Shivinder Mohan Singh in India.

Speaking of major learnings from the deal, Bhatia said it’s imperative to build trust of the counter-party and added that one cannot go with a “straight jacket view" with respect to how a deal will evolve.

According to Bhatia, TPG believes in staying ahead of the curve and waiting for the right moment to seize a deal. “Identify either a macro theme or a special situation or an opportunity ahead of its time and start positioning yourself ahead of the curve and then wait for things to change in your favour," he said.

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