A clutch of top global private equity funds, including EQT (formerly BPEA EQT), KKR, Bain Capital, and Advent International, are likely to have submitted initial bids as Apax Partners-promoted Healthium Medtech goes on the block in a mega deal that's likely to value the medical devices firm at $750-850 million, multiple sources told Moneycontrol.
A consortium of Canada's Ontario Teachers Pension Plan Board, which owns Sahyadri Hospitals, and ChrysCapital, which was also evaluating the deal earlier, has opted to drop out of the race, these sources added.
"Preliminary bids have come in this week from multiple private equity players. There is a lot of interest in this transaction as there are not too many medical devices businesses of this scale and size up for grabs in the market. Healthium Medtech is a leading domestic player in the surgical sutures category and is also in the global big league in this space," one of the sources said.
Incidentally, Apax Partners was earlier exploring a public listing for the asset but later shifted to a sale process. Sahajanand Medical Technologies, which is backed by Morgan Stanley PE, and Lotus Surgicals, backed by Murugappa Group and Premji Invest, are some of the other players in the domestic medical devices space.
Other than EQT, KKR, Bain Capital and Advent International, there is also buzz of General Atlantic aiming for the deal, with earlier reports naming the US private equity firm as a potential suitor, but its participation through a bid submission couldn't be verified independently by Moneycontrol.
"Healthcare consumer spending proxy seems to be the broader investment thesis for this transaction for all suitors. If healthcare spending goes up, then the segment of medical devices will do well too. In specifically EQT's case, Healthium Medtech has the same characteristics as Indira IVF - high margins, high RoC ( not capital intensive) and good growth," a second person familiar with the ongoing negotiations said.
In July 2023, EQT announced the acquisition of India's largest IVF (in vitro fertilisation) speciality clinics chain Indira IFV. On July 22, Moneycontrol was the first to report that the Sweden-headquartered firm had the edge over other suitors in the race to acquire Indira IVF in a transaction expected to value the latter at $1 billion.
KKR has older business relationship with Healthium Medtech as it had inked a pact in December 2022 to sell its UK subsidiary to the US private equity major. "Moreover, globally, KKR is comfortable in this segment," a third person told Moneycontrol, adding that investment bank Jefferies is running the sale process.
Bain Capital was eyeing a majority stake in Hyderabad-based contract research, development, and manufacturing organisation (CRDMO) player Sai Lifesciences, backed by TPG, for around $800 million and had emerged as the sole contender for the deal, Moneycontrol had reported on January 25.
According to a recent report by the Economic Times, the promoters of Sai Lifesciences along with the investors are now exploring an IPO instead on the back of the buoyancy in the public markets with differences over valuations in the sale process.
"Considering the changing dynamics involving a big transaction like Sai Lifesciences, it will be interesting to see the Bain Capital strategy going ahead and how they approach the Healthium opportunity," a fourth person familiar with the sale process of Healthium Medtech told Moneycontrol.
All the four persons quoted above spoke to Moneycontrol on condition of anonymity.
When contacted , EQT, KKR, Bain Capital and Advent International declined to comment. An email query to Apax Partners remained unanswered till the time of publishing this article. Ontario Teachers, ChrysCapital and Jefferies could not be reached for an immediate comment. This article will be updated as soon as we hear from the firms.
Healthium Medtech: A closer look
In 2018, British private equity firm Apax Partners acquired Bengaluru-based Healthium Medtech, earlier known as Sutures India Pvt Ltd, from investors including TPG Growth and CX Partners. Back then, reports had pegged the firm's valuation at around $350 million.
The company manufactures and sells wound closure products such as absorbable and non-absorbable sutures, mesh, tapes, skin staplers, ligation clips along with medical consumables like surgical gloves, tubular bandages and catheters. The export market for these products is spread over 90 countries in Europe, South America, Africa and Asia. Healthium Medtech has seven manufacturing facilities and three R&D centres.
According to a January 31 report by rating agency ICRA, the company registered a revenue of Rs 393.4 crore and a profit of Rs 68.9 crore in H1 FY24. It reported a revenue of Rs 728.5 crore in FY23 and a profit of Rs 112.9 crore during the period, excluding a one-time gain of Rs 490.3 crore from a subsidiary sale.
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