Hindujas sell health care unit to Baring Private Equity for $1.2 billion

The transaction is based on an enterprise value of $1.2 billion, subject to closing adjustments, and is expected to conclude within 90 days

Hinduja Group’s business process management entity, Hinduja Global Solutions Limited (HGS) said Wednesday it has entered into definitive agreements to divest its Healthcare Services business to funds affiliated with Baring Private Equity Asia (BPEA), at an enterprise value of $1.2 bilion. 

The deal is subject to closing adjustments, and is expected to complete within 90 days, subject to shareholder and other regulatory approvals.

"The cash that will come in as a result of this transaction will be deployed to growing the business as well as looking at buying some capabilities...where capabilities are important for being able to do a good job of customer experience transformation. So that is a string of pearls acquisition strategy," said Partha DeSarkar, Global CEO, HGS, at a call to discuss the divestment and first quarter results. 

The three areas where HGS is looking to buy capability are the three A's- analytics, artificial intelligence and automation, he said.

DeSarkar said HGS is looking at changing the mix of the business and making it more technology-led. The other part of the business is about $350 million in size, and improving in profitability, he added.

The Healthcare Services vertical has over 20,000 employees across four geographies – India, the Philippines, the US and Jamaica – and recorded revenues of approximately $400 million in FY2021. 

HGS said it will focus on strengthening its Consumer Engagement Solutions (CES), HGS Digital and HRO/ Payroll businesses that support several top global brands across its 9 verticals.

Services to healthcare clients delivered by the HGS Digital and HRO/ Payroll businesses will continue to be part of HGS’ portfolio.

“Our Healthcare Services business has steadily grown over the years. We reached a stage where we could recommend to promoter to divest stake in this business to unlock value for all HGS stakeholders. We will use the generated funds to strategically invest for the future growth of the organization. We see a long-term value and benefit to HGS in doing so”, said DeSarkar in a statement earlier.

HGS’ Healthcare Services business supports payer, providers, laboratories, durable medical equipment firms and pharmaceutical companies with solutions that augment clients’ healthcare teams to deliver better patient, member, business and financial outcomes. 

The services cover the entire lifecycle of a payer organization, including member acquisition, enrollment & billing, benefit set-up, claims adjudication, provider credentialing and data management, payment integrity and financial recovery, grievance and appeals, provider & member engagement, prior authorizations, case management and population health management, and the various functions in the revenue cycle of a provider organization.

Post completion of the transaction, HGS will transfer all client contracts, employees, and assets, including infrastructure related to the Healthcare Services business.

“We have been investing in the Technology Services sector for more than two decades and have long-admired HGS as a leading specialist Healthcare Services provider. We are excited to now have the opportunity to partner with CEO Ramesh Gopalan and his team to help take HGS’ Healthcare Services business to the next level as a new independent company. This will be our seventh investment in the sector and third in Healthcare Technology Services following previous investments in CitiusTech and AGS Healthcare, and we continue to be excited about the digital transformation opportunity in the space,” said Jimmy Mahtani, MD, BPEA.

Barclays Bank Plc.acted as the sole financial advisor to HGS on the transaction.

 

Firm’s net profit surges 138%

Hinduja Global Solutions (HGS) reported its first quarter results on Tuesday. Revenue for the quarter ended June 30 was Rs 1,550 crore, a growth of 25.5 per cent annually, while net profit rose 137.7 per cent year-on-year to Rs 117 crore. Net margin stood at 7.5 per cent. HGS had 252 crore BPM clients and 717 HRO/payroll processing clients at the end of the quarter, and employee headcount was 42,769, an increase of 2,880 from the previous quarter. The firm had 55 global delivery centres across seven countries at the end of Q1.