Metropolis founder Velu in talks with PEs for stake sale

Velu has started discussions with private equity investors to sell his 37% stake in Metropolis valued at Rs 740 cr

The tussle between promoters of diagnostic chain Metropolis Healthcare is headed for a climax as G S K Velu, co-founder and vice-chairman, plans to sell his holding in the company.

According to people in the know of the developments, Velu has started discussions with private equity investors to sell his 37 per cent stake in Metropolis valued at Rs 740 crore. The Chennai-based Veda Capital is advising Velu on the sale.

Three weeks ago, the co-promoter Shah family had bought a 27 per cent stake in Metropolis from Warburg Pincus for Rs 550 crore with backing from alternative assets manager KKR and a few industrialists.
 

Warburg had invested $85 million in Metropolis in 2010 by buying ICICI Venture's holding as well as new shares from the promoters.

Founder Chairman Sushil Shah and Managing Director and Chief Executive Ameera Shah have thus raised their stake in Metropolis to 63 per cent from 36 per cent.

Velu is left with no option but to exit the company as differences have widened among the promoters.

Velu had alleged foul play in Warburg's stake sale to the Shahs because he was allegedly not informed about it. In case of a promoter's exit, the deal needs approval from other investors and existing promoters, according to an agreement between the Shahs and Velu.

When contacted, Velu said, "I cannot respond to speculation as the well being of the company, its customers and its employees is of paramount importance to me despite boardroom differences. I have no comments to offer on this issue at this stage."

Ameera Shah refused to comment on the matter.

Sources said Velu had asked US-based private equity firm Carlyle to back him in buying out Warburg's stake in Metropolis. Carlyle was, however, no longer interested in buying Velu's stake, sources said.

Warburg was the second private equity investor in Metropolis after ICICI Venture had invested Rs 35 crore in 2006 from its India Advantage Fund Series I.

Metropolis delivers over 15 million tests a year through 10,000 laboratories, hospitals and nursing homes, and 200,000 consultants. It has 125 laboratories in India and six other emerging markets, 750 collection centres and over 3,500 employees.

Velu runs Trivitron, a Chennai-based medical technology company, as its founder and managing director. He is also the founder and chairman of Maxivision Eye Care Hospitals and founder and director at Alliance Medicorp and Alliance Dental.