Second largest hospital buyout in India: Blackstone, CVC, Temasek & Max eye Care Hospitals

A handful of strategic and private equity investors including Blackstone, CVC Capital, Temasek and Max Healthcare are vying to acquire Care Hospitals from Evercare, a wholly owned entity of TPG Growth, said people with knowledge of the matter. One of the sources said even Brookfield is in the fray, but it could not be independently verified.

Among the largest hospital chains in India, the deal involving 2,400 beds — 15 hospitals in India and two in Bangladesh — will value Care Hospitals at around Rs 7,500 crore ($950 million). That would also make it the second largest hospital buyout in India after the IHH-Fortis transaction in 2018. The first round of bids are in and two-three entities will be shortlisted in a few weeks, with diligence beginning soon, said one of the persons cited.

Investment banks Rothschild and Barclays are advising TPG on the sale process. Care Hospitals is expected to post revenue of $375 million in FY23 with an ebitda of $75 million, the source added.

Having begun in 1997 as a cardiac hospital in Hyderabad with 100 beds, Care has a network of 15 facilities in six states with more than 2,400 beds offering 30 clinical specialties in India and Bangladesh. It has two hospitals in Dhaka with 1,000 beds. Care had added 250 beds in July by acquiring Indore-based CHL Hospitals for Rs 350 crore.

In 2018, TPG Growth-backed Evercare acquired the healthcare portfolio of UAE’s Abraaj Growth Markets Health Fund, which owned a majority stake in CARE Hospitals. Dubai-based Abraaj collapsed following allegations of mismanagement of its $1 billion healthcare fund. Abraaj had purchased 72% in Care Hospitals from Advent Capital for Rs 2,000 crore in January 2016.

TPG also owns about 20% of Ranjan Pai-led Manipal Hospitals and has a controlling stake in Motherhood Hospitals, a network of women and children’s hospitals in India. TPG, Blackstone, Temasek, Brookfield and Max Health declined to comment. CVC didn’t respond to queries.

India’s healthcare industry has been expanding at a compounded annual growth rate (CAGR) of about 22% since 2016. At this rate, it is expected to reach $372 billion in 2022, said a 2021 Niti Ayog report. India has a vast potential for investment in the under-penetrated hospitals sector, experts say.

India has seen large deals in the hospitals space in the recent past. In the first buyout in the Indian PE space, Ontario Teachers’ Pension Plan Board had acquired a significant majority stake in the Sahyadri Hospitals Group at a valuation of `2,500 crore in August.

(With inputs from health)