IIFL PE Fund to invest about ₹500 crore in Kauvery Hospital for a minority stake

Mumbai: IIFL Private Equity Fund is set to invest ₹500 crore- ₹600 crore in hospital chain Kauvery Hospital for a minority stake, two people aware of the development said.

“IIFL is about to close the deal with Kauvery for a minority stake. The deal will likely be announced in a few days,” one of the two people said, requesting anonymity.

“It is likely to be a mix of a primary and secondary share sale, with the existing investor of the hospital chain Lightrock (previously known as LGT Lightstone Aspada) selling part of its shares in the company. The primary part of the funds raised will be used to expand the business,” the person added. In September 2019, the hospital chain raised ₹140 crore from Lightrock.

The deal will value the hospital chain upwards of ₹3,000 crore, he added.

Spokespeople for IIFL Private Equity Fund and Kauvery Hospital declined to comment on the development.

In October, VCCircle reported that other investors, such as Quadria Capital and ChrysCapital, were also in the race to invest in Kauvery Hospital, run by Sri Kavery Medical Care Pvt. Ltd.

Kauvery Hospital, established in 1999, has a presence in Tiruchirappalli, Chennai, Salem, and Hosur in Tamil Nadu. It also has a centre in Bengaluru.

The group had a combined installed bed capacity of 1,284 as on 30 June.

The company reported consolidated revenue of ₹846.97 crore in FY22, rising from ₹597.22 crore in FY21, according to a report by credit rating agency Brickworks Rating.

The hospital chain’s profit increased to ₹99.42 crore in FY22 from ₹58.89 crore in the previous year.

The rating agency raised the company’s credit rating by a notch to A+, citing continuous improvement in the financial performance for two consecutive fiscals, FY21 and FY22, backed by an improvement in the operating metrics and a similar growth momentum in H1FY23.

“The company’s operating income grew by ~38% on a standalone basis and ~42% on a consolidated basis in FY22.

The improvement in the scale of operations also resulted in an improvement in the profitability, gearing and debt protection metrics. Additionally, the company has been focusing on inorganic growth and has recently acquired a few assets.

BWR also takes note of such ongoing capex, with most of them either completed or expected to be completed in the current fiscal, augmenting the company’s scale of operations and diversifying the revenue stream in the near to medium term,” the credit rating report noted.