Trivitron Healthcare, the Chennai-based healthcare equipment firm with yearly revenue of about Rs 500 crore, is understood to have started negotiations with the US-based, $16-billion Medtronic Inc for a strategic equity infusion.
Since early this year, Trivitron has sought to raise $100 million from the market to fuel its expansion plans and offer partial exits to its private equity investors, HSBC Private Equity (now Headland Capital Partners) and ePlanet Ventures.
New York Stock Exchange-listed Medtronic is a global developer and manufacturer of medical technology equipment, with a wide range of products for cardiac care, surgical technologies, diabetes and the ear, nose and throat segment, among others.
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According to investment bankers close to Trivitron, the company is firming up a $100-million investment plan which would help it fund its expansive medical technology park near Chennai and embark on further inorganic growth. Late last year, Trivitron had acquired a minority stake in Mumbai-based Kiran Medical Systems, which is into image enhancement and radiation protection. In 2008, it had acquired Pune-based X-ray machine manufacturer Vision Engineering.
This is the second instance of Trivitron opting for external equity. In 2007, it had raised about Rs 50 crore from HSBC Private Equity and ePlanet Ventures. “It is likely both these PE (private equity) investors would be looking at total exits. The enterprise valuation being discussed for this round of funding is about 1.5 times the revenue,” an investment banker told Business Standard.
G S K Velu, founder and managing director of Trivitron, had earlier said the company planned to raise $100 million from the market to offer partial exits to the earlier investors.
However, he now declined to comment on the discussions with Medtronic. The latter, too, declined to comment on the transaction, saying it was interested in discussions with various companies to see whether there was a strategic fit.
Trivitron, which started as a medical equipment distributor, has emerged as a major domestic medical technology company, focusing on manufacturing and distribution. Its key focus segments include cardiology and implantable devices, imaging sciences, diagnostics, critical life support solutions and ophthalmology. It also has a range of offerings in the value and premium segments.
A key agenda for Trivitron would be to increase its revenue from manufacturing devices, and not rely on distributing. About 35 per cent of its revenue is from manufacturing. The company plans to increase this to 80 per cent, as this segment offers better margins.
Keeping this in mind, Trivitron has set up the Trivitron Medical Technology Park to manufacture internationally accredited medical technology products, in partnership with global pioneers.
The products to be made at the technology park include ultrasound systems, in-vitro diagnostic reagents and modular operating rooms, molecular diagnostic products, haemodialysis systems, cardiac diagnostic instruments, implantable medical devices.