Manipal, IHH in race to acquire Pune's Sahyadri Hospitals for Rs 6,000 cr

In what can be another private equity hospital deal, Temasek backed Manipal Hospitals and Malaysian healthcare giant IHH are in race to acquire Pune based 1200 bed Sahyadri Hospitals from Canadian pension fund Ontario Teachers Pension Plan Board (OTPP). The deal size could be around ₹4000-6000 crore, according to people close to the transaction. 

 

OTPP engaged bankers to start the proposed sale process some time ago. While no official offers have been floated yet, sources close to the development said that the bidding process is likely to start soon.

 

“The process will start soon for formal bid submission, which may take a few weeks. Initial inquiries have taken place,” said a source. The value of the hospital is likely to be around 14–15 times its Ebitda, working out to approximately ₹3,500,” the person quoted above said.  Sources close to the transaction also pointed out that if the Ebitda multiple is higher at 20-30 times, then the deal size could go up further.  

 

It is learnt that Manipal Hospitals, which has been expanding its network across the country, and IHH, which owns a majority stake in Fortis Healthcare, are in the race.

 

A Temasek spokesperson said: “Temasek does not comment on behalf of its investee companies.” An email sent to Manipal Hospitals remained unanswered at the time of going to press. Emails sent to IHH and OTPP also did not elicit a response.

 

OTPP owns nearly 100 per cent of Sahyadri Hospitals, which has facilities in Pune, Ahmednagar, Nashik, and other locations. It specialises in mother and childcare, apart from oncology. In recent years, the hospital chain has invested close to ₹750 crore to expand its footprint across Maharashtra. According to its website, Sahyadri has 11 hospitals, 2,000 clinicians, and 4,000 expert staff.

 

It is a strategic fit for Manipal Hospitals, which has acquired AMRI Hospital, Medica Synergie in eastern India, as well as the Columbia Asia network and Vikram Hospitals in the south. Sahyadri will provide the much-needed footprint in western India.

 

Meanwhile, IHH is aiming to be among the top three hospital players in India. It currently operates hospital networks under the Fortis and Gleneagles brands in the country.

 

In September, Prem Kumar Nair, group CEO, IHH Healthcare, told Business Standard that the Malaysian major plans to double its bed capacity in India to 10,000 in the next few years. Of this, around 2,000 beds would come through brownfield expansion in the next four to five years.

 

At present, IHH operates over 5,000 beds in India under Fortis and Gleneagles. Fortis will add close to 2,000 beds, while Gleneagles will add another 600 beds.

 

Globally, IHH has announced plans to add 4,000 beds organically over the next few years, of which more than 50 per cent is likely to be in India. Another 3,000-odd beds would eventually come through possible acquisitions, where the company is looking at assets in its core markets, strategically aligned with its current operations, and EPS-positive within two to three years. Nair clarified that Fortis can fund its growth plans from internal accruals.

 

India is among the top markets globally for IHH and contributes around 16–17 per cent to its global revenues.

 

According to a Grant Thornton Bharat and Association of Healthcare Providers of India (AHPI) report, hospitals in India undertook mergers and acquisitions (M&A) deals worth $6.74 billion and attracted $4.96 billion from private equity (PE) investors, accounting for 40 per cent and 38 per cent of such deals between 2022 and 2024, respectively. During this period, hospitals also raised $466 million through initial public offerings.

 

 “Valuation multiples range between 20 and 30 times the earnings before interest, tax, depreciation, and amortisation (Ebitda), particularly in high-demand specialties such as oncology, cardiology, and mother-and-child care,” it added.