Merger of Premji fund-backed hospital chain, Medica likely

HealthCare Global Enterprises (HCG), the Bangalore-based cancer hospital chain, is understood to be looking at a merger with Kolkata-based Medica Synergie, in a deal estimated at Rs 300 crore.

Premji Invest, the Azim Premji-owned, $1.5-billion private and public equity fund, is an investor in HCG.

HCG is a Rs 400-crore, 1,600-bed hospital chain, while Medica has two hospitals in Kolkata and Siliguri, with close to 450 beds. Medica also has a few other franchisee hospitals.

The managements of both the hospitals said they were exploring strategic partnerships. They, however, declined to comment on the merger.

ICICI Venture arm I-Ven Medicare, which has invested close to Rs 70 crore in Medica, is expected to exit in the merger.

Religare-Milestone Private Equity is another investor in HCG, while IDFC Private Equity and Evolvence Private Equity had earlier invested in the company. Religare-Milestone is also understood to be exiting HCG in this deal. However, it is still unclear if Premji Invest would invest more in HCG, or whether a new fund would step in.

So far, HCG is understood to have raised close to Rs 150 crore through private equity funds.

HCG is expected to set up an oncology centre at Medica hospital in Kolkata.

B S Ajaikumar, a key HCG promoter, confirmed the company was in talks with Medica to set up an oncology centre, while Alexander Kuruvilla, president & chief executive, Medica Synergie, also confirmed discussions with HCG. “It is too early to think about what other steps will emerge….We have just said hello,” Kuruvilla told Business Standard.

According to at least two investment bankers privy to the transaction, HCG was taking this step keeping in mind the imperative need to expand beyond cancer care. Ajaikumar said HCG would look at multi-speciality hospitals, as and when these came its way. He, however, said HCG would not be aggressive in that segment.

“Nearly 75 per cent of our operations are in cancer care, across 22 locations in India. We are planning a multi-speciality hospital in Pune, and work for this is underway….We plan to add another 500 beds in the next 18 months, at a cost of about Rs 350 crore,” he said. The investment bankers said HCG was working at a 17-18 per cent margin.