Mumbai: KKR is set to purchase a controlling 51 per cent stake in Bengaluru-primarily based cancer care hospital chain Healthcare International Enterprises (HCG) from personal fairness peer CVC Capital Companions, mentioned folks within the know, because the US buyout group doubles down on the healthcare sector which has already seen huge PE-led consolidation.
The definitive agreements are anticipated to be signed between the important thing shareholders within the subsequent few days, probably as early as this weekend. The HCG board is assembly on Thursday and Friday to focus on quarterly earnings. The transaction can also be anticipated to be mentioned.
KKR is planning to buy a 51 per cent stake from CVC Capital Companions at Rs 430-440 per share, which marks a 14-16 per cent low cost to Thursday’s closing market value of Rs 511.45 per share on the BSE, in accordance to the folks. This may spell a Rs 3,128 crore payout.
The US group will then launch an open supply for one more 26 per cent, at an anticipated Rs 490 per share primarily based on the formulation fastened by the Securities and Trade Board of India. If profitable, KKR will find yourself proudly owning 77 per cent of the corporate. At this value, the whole consideration for KKR can be Rs 4,900 crore.
The hospital chain’s inventory has appreciated 44 per cent previously six months on account of improved monetary efficiency and in anticipation of a sale.
KKR and CVC Capital Companions didn’t reply to ET’s emailed queries until press time.
ET was the primary to report, on December 4, 2024, that KKR was closing in on the acquisition. Final 12 months, after buying Child Memorial Hospital, it made a comeback to the sector after one in all its largest paydays in India when it exited Max Healthcare.
HCG’s founding household, led by oncologist-turned-entrepreneur BS Ajaikumar, will proceed to personal 10.87 per cent of the corporate, however Ajaikumar is predicted to step down as govt chairman for a non-govt function and proceed to steer the chain’s analysis and growth capabilities.
CVC Capital Companions, which at present owns 60.36 per cent, will retain a 9 per cent shareholding, mentioned the folks cited earlier. The Luxembourg-primarily based agency purchased a controlling stake in HCG in June 2020 for about Rs 1,049 crore by shopping for new shares and convertible warrants. It acquired extra shares later by means of a compulsory open supply.
Messages and calls to Ajaikumar for feedback on the deal remained unanswered.
In December final 12 months, he informed ET that he was not promoting his stake.
The cancer business is rising at a compound annual progress charge of 17 per cent and HCG is outpacing the business progress.
Earlier, in October 2024, KKR and CVC Capital Companions had entered into bilateral negotiations to sew the deal. The settlement will finish months of parleys with a number of PE teams together with Bain Capital.
Goldman Sachs, JP Morgan, Allegro and Ambit are the deal advisors.
Operational since 2005, HCG at present operates 21 complete centres and three multispecialty hospitals throughout India. The community additionally contains one cancer care centre in Kenya. Its debt backed progress in the course of the Covid-19 pandemic, which disrupted cancer care providers, massively dented the corporate’s monetary efficiency, significantly in 2020-21. Nevertheless, the corporate has seen improved efficiencies and has additionally undertaken progress initiatives, each natural and inorganic, within the latest previous.
Late final 12 months, HCG acquired MG Hospital in Vizag, a complete care supplier with 196 operational beds and wholesome margins of 35 per cent. Moreover, it inaugurated a 200-mattress complete cancer care centre in Ahmedabad and is including 125 beds in North Bangalore. The corporate plans to add 900 incremental beds within the subsequent 4-5 years to seize new alternatives. Analysts anticipate its revenue after tax to cross Rs 200 crore by 2026-27, growing from Rs 41 crore in 2023-24.
Presently, the inventory trades at 13 occasions enterprise worth to its earnings earlier than curiosity, taxes, depreciation and amortisation estimated for 2025-26, and the business expects a major rerating after the KKR acquisition.
“The corporate is effectively positioned to experience the upcycle,” mentioned Ankush Mahajan, analyst with Axis Securities.
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