Temasek buys majority stake in Manipal Health in largest wellness deal

Takes stake from promoters, TPG, NIIF at Rs 40,000 crore enterprise value

In the largest transaction in the health care segment, Singapore-based private-equity giant Temasek Holdings has increased its stake in Manipal Health Enterprises by buying an additional 41 per cent from the promoters and other investors including TPG, a US-based private-equity firm, and the National Investment and Infrastructure Fund (NIIF) at an enterprise valuation of Rs 40,000 crore, people in the know said.

With this, the Temasek stake will increase to 59 per cent from 18 per cent. Banking sources said plans for an initial public offering of the hospital had been shelved for the time being, considering the exit of the current shareholders.

“Temasek is writing a Rs 16,000-crore cheque to buy out the additional stakes from the existing shareholders. The management of the company, led by Ranjan Pai, will remain the same,” a banking source said.

After the transaction, TPG will hold part of its 21 per cent stake and the Pai family a portion of its current 52 per cent stake.  Temasek has stayed invested in Manipal for the past six years and plans to remain a long-term investor.

An email sent to Temasek did not elicit a response. Manipal executives did not comment. 

Backed by private-equity players, Manipal Health has been expanding its footprint and emerged the largest hospital chain in the country after Apollo Hospitals. The network is estimated to have 8,700 beds across 28 locations.

In April 2021, Manipal Health had acquired the Columbia Asia Hospital chain for Rs 2,100 crore, taking its bed strength to 7,300 across 27 locations. In June 2021, it bought Vikram Hospitals in Bengaluru from Multiples Private Equity for Rs 350 crore.

Manipal Health Enterprises will also acquire Emami Group’s stake in AMRI Hospitals at a valuation of Rs 2,350 crore. AMRI operates four hospitals, of which three are in Kolkata and one in Bhubaneswar, with a capacity of around 1,100 beds, which can be ramped up to 1,200. 

A churn is happening in the health care sector. In August last year, private-equity firm KKR sold its 27 per cent stake in Max Healthcare for Rs 9,200 crore via block deals to a number of shareholders. In 2018, Malaysia’s IHH acquired 31 per cent in Fortis Hospitals by infusing Rs 4,000 crore into the company.

Global private-equity majors are investing in the Indian health care segment because the revenue of private hospitals is expected to have grown 10-11 per cent in FY23, and is anticipated to increase at the same clip this financial year, said a CRISIL report. Revenue growth will be due mainly to rising bed occupancy and sustaining high average earnings per occupied bed.

In FY22, private hospitals in India had reported an all-time high profitability rate of 19 per cent due to the pandemic.