After Fortis race, Manipal plots growth in India, overseas markets

After dropping out of the race to acquire India’s second-largest health care chain Fortis Healthcare, Bengaluru-headquartered Manipal Health Enterprises is now charting out growth plans in domestic as well as overseas markets. Backed by private equity players such as TPG and Temasek, the firm is on the lookout for potential targets to expand.

The Ranjan Pai-led health care major now has 2,200 operational beds in India of the total 3,000 capacity it has. It plans to add another 2,000 beds in India in the next five years. Overseas, it plans to add at least 750 to 1,000 beds in the next five years.

Rough estimates show that at a rate of Rs 10 million per hospital bed, the investment in India alone would be around Rs 20 billion. Investments could vary if the expansion is through the inorganic route.

Manipal already has presence in Malaysia, with a 220-bed hospital in Klang. Besides looking at organic expansion of the existing hospital, Manipal, which lost out to Malaysia’s IHH Healthcare Bhd in picking up a stake in cash-strapped Fortis, is looking to set up a 300-350 bed greenfield hospital in Malaysia.

“We are looking for a local developer who will build and lease the building to us. In Malaysia, we are looking at an asset-light model. We would invest in equipment, interiors, manpower etc,” said Ranjan Pai, chairman of the Manipal Education and Medical Group.

He added that Manipal had explored Singapore and Indonesia markets as well, but did not find any suitable business proposition. It is also looking at the Sri Lanka and Bangladesh markets.

As for India, Pai said Manipal was evaluating acquisition opportunities. They might put together a couple of regional chains to build a national presence. At present, Manipal’s presence is strong in the southern market.

“We would take a call depending on the quality of the asset, such as revenue per bed, potential for growth in the market it serves, etc. Mergers and acquisitions are a long cycle. However, we want to close one or two transactions within the next couple of years,” Pai said.

Temasek, which was not very keen on the Fortis deal, will continue on the board of Manipal Health. The Singapore-based sovereign wealth fund had picked up about an 18 per cent stake in Manipal last year.

TPG was backing Manipal to pick up a stake in Fortis. Manipal has now been approached by larger fund houses that are interested in partnering with its expansion plans.

On expansion mode
 

• TPG- and Temasek-backed Manipal Health is looking for multiple buys in the hospitals segment in India
• Looking for regional assets
• Aims to close one or two deals in the next two  years
• To add 2,000 beds in India; 750-1,000 beds overseas 
• Looking to set up a 300-350 bed hospital in Malaysia; already runs a 220-bed hospital in that country