Manipal Healthcare set to raise much needed capital from Kotak PE Fund

DFC likely to exit in a holdco deal

Manipal Health Systems, the Bangalore-based healthcare chain, is close to raising around Rs 150 crore from Kotak Private Equity Fund in a structured transaction. The investment if it comes through is expected to give an exit to IDFC Private Equity Fund, which had invested Rs 90 crore during late 2006.

Industry sources indicate that Manipal Health Systems is looking at holding company structure to draw in the investment from Kotak PE fund, which will then funnel in the investment to consolidate its hospitals across South India. Manipal Health has been in the market for the past nearly 18-months with a mandate to raise as much as $100 million. “The company was close to sealing deals with two large global PE players in addition to a global strategic player, but due to economic downturn and valuation differences the deal did not materialise,” sources close to the deal said.

Manipal Health Systems, with a topline of around Rs 500 crore, offers Tertiary, Secondary and Primary healthcare delivery services from 17 hospitals, 9 Primary Care Clinics and 55 Community Health Programs. The five decade old group has over 7000 beds and 5000 doctors and treats around 1.5 million out-Patients & 400,000 inpatients annually. Manipal is also looking to expand its presence in Mumbai and Delhi markets. Manipal Health Systems and Kotak PE Fund officials could not be reached for comments.

The scenario of healthcare chains consolidating in India has been pretty active in the recent past with Fortis taking giant strides in the market. Flush with funds by exiting Ranbaxy, Fortis after acquiring Wockhardt Hospitals for around Rs 900 crore recently went on to acquire a significant position in Singapore-based Parkway Hospital for around $686 million.

The emergence of Fortis as a pan-India player in this segment is expected to be matched closely by established Apollo Hospitals Group, which according to industry information is also readying for consolidation.