Peepul Capital, the India-focused private equity (PE) fund with $700 million of assets under management, is understood to be looking for an exit from Medall Healthcare, the South-India focused diagnostic chain.
It is understood that Peepul would aim for a twofold return on its $20 million investment, made in mid-2009. It would be their second significant exit after it made close to a fourfold return from its investment in MedPlus, a discount pharmacy chain also into diagnostics.
Medall is primarily led by serial entrepreneur Raju Venkatraman, Peepul Capital and Chintalapati Holdings. Venkatraman, prior to leading the buyout of Medall with Peepul Capital during 2009, was one of the key persons behind organisations such as Firstsource, RevIT, Lason Inc and VetriSystems Inc.
Medall operates around 60 centres across South India with a clinical team of 100 radiologists and pathologists. Medall performs three million studies annually and is also actively involved in public-private-partnership healthcare projects in Tamil Nadu, Andhra Pradesh and Karnataka.
Medall also acquired a 91 per cent stake in Clumax Diagnostics and Research Centre in Bangalore in February 2010, as part of an aggressive inorganic expansion strategy.
Investment bankers say the first option will be to exit in favour of another PE fund.
Also, Peepul would look at bringing in a strategic investor. The managements of Peepul and Medall could not be reached for comment.
Industry analysts tracking the company say there is immense potential in this segment but companies would have to take into account the capital-intensive nature of the business and the ability to tap radiologists as they expand, especially in tier-II and tier-III cities.
Diagnostic chains have in recent years been in the eye of many PE investors. Companies such as Medall, Medplus, Dr Lal Pathlabs and Metropolis have raised significant funding.
WestBridge Capital and TA Associates recently invested $44 million in Delhi-based Dr Lal Pathlabs, expanding aggressively.