Healthcare-focused Asian PE fund
is all set to sell Medica Superspecialty Hospital, one of the largest hospital chains in eastern India, according to two people aware of the development.
Quadria and Europe-based co-investors DEG and Swedfund are in the process of hiring an investment banker to shepherd the process. The proposed deal will value the chain at Rs 500-600 crore, said one of the persons cited above. The consortium holds about 67% in the 400-bed Medica Superspecialty Hospital.
The consortium consists of Singapore-based Quadria Capital, DEG — the German development finance institution and a subsidiary of KfW, and Swedfund, a Swedish development finance institution.
These investors had acquired the stake from ICICI Venture for Rs 160 crore in 2013 at a valuation of s 240 crore. Medica Superspecialty Hospital, Kolkata, serves as the hub for facilities in Ranchi, Siliguri and Rangapani (North Bengal), Patna, Kalinganagar (Odisha), and Tinsukia (Assam).
“The funds are in talks with various investment bankers, including a Chennai-based boutique bank, and the mandate will be given in a month,” said one of the persons cited above. However, it is not yet clear whether the promoters will sell their stake to the new investor. “It is premature to discuss if we will hold the stake or sell,” said Alok Roy, chairman, Medica Superspecialty. Quadria Capital Managing Partner and Co-Founder Amit Varma declined to comment. Mails sent to DEG and Swedfund remained unanswered until the publication of this report. Quadria has assets under management exceeding $1.5 billion and investments in 18 companies across the Asia-Pacific region. Besides the six-year-old investment in Medica, Quadria also holds a stake in the Bengaluru-based superspecialty oncology hospital chain Healthcare Global. Its other Indian investments include the South-based hospital chain Krishna Institute of Medical Science, healthcare delivery services platform Healthcare at HOME, biopharma ingredient maker Concord Biotech, and bioinformatics and research services provider Strand Life Sciences.
After regulatory changes introduced price controls on cardiac stents and knee caps, several hospital chains have seen a decline in margins. Hence, the promoters of mid-sized hospital chains are looking for a buyer for their assets. Promoters of another Kolkata-based hospital chain, AMRI Hospitals Ltd (Advanced Medical Research Institute), are also considering an exit and have been holding discussions with other hospital groups. FMCG major Emami Group, the promoter of AMRI, is looking for a valuation of Rs 800-1,000 crore, and is in talks with Manipal Group, ET reported last August. Emami holds about 98% stake in AMRI, which has about 1,000 beds in five hospitals across Kolkata and Bhubaneswar.
Habil Khorakiwala-promoted Wockhardt Hospitals is also looking for a buyer for its four hospitals located outside Mumbai.
PE-backed hospital platforms and strategic buyers are consolidating their positions in the Indian healthcare industry through more buyouts. PE-backed Manipal Hospitals is still in negotiations to acquire Naresh Trehan-owned Medanta Medicity, while Malaysian healthcare giant IHH Healthcare is completing its acquisition of the leading chain Fortis.
However, the sector remains underpenetrated, with high growth potential. The hospital industry will require an investment of around $245 billion over the next 20 years, according to a recent PwC report. India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years, it added.