Blackstone & Warburg Pincus may join other early-stage suitors as Ontario Teachers launches sale of Sahyadri Hospitals

In August, the investment firm also sealed the buyout of a controlling stake in Kerala based Baby Memorial Hospitals.

Private equity majors Blackstone and Warburg Pincus may join other early-stage suitors and express preliminary interest in acquiring Pune -based Sahyadri Hospitals which is owned by top Canadian pension fund Ontario Teachers Pension Plan Board ( OTPP), multiple industry sources in the know told Moneycontrol.

" The sale process has been launched recently, and information memorandum's have been shared. These are early days and Blackstone and Warburg Pincus are likely to show interest along with other strategic and financial bidders ," said one of the persons. A second person confirmed the above and added that initial bid submissions were likely post April end.

" If the talks fructify into a deal , Warburg Pincus may want to use the target as a platform and scale up. On the other hand, Blackstone wants to be the number one hospital operator in the country and is likely to look at this asset not directly, but through the Quality Care platform," a third person told Moneycontrol.

All the three persons above spoke to Moneycontrol on the condition of anonymity.  An email query to OTPP and Sahyadri Hospitals was left unanswered at the time of publishing this article. This article will be updated as soon as we hear from the parties. Blackstone and Warburg Pincus declined to comment.

In terms of other potential bidders, earlier, on March 10, Moneycontrol was the first to report that Singapore investment giant Temasek and billionaire Dr Ranjai Pai led IPO-bound Manipal Hospitals, Malaysia's IHH Healthcare , Swedish private equity major EQT and US private equity firm KKR are among suitors which were in the fray for the largest private multi-speciality hospital chain in Maharashtra.

On January 23, Moneycontrol had also reported that OTPP had engaged investment bank Jefferies for the proposed sale process. Alvarez & Marsal was roped in later as well.

As per the January 23 report by Moneycontrol, OTPP owns nearly 100 per cent of the firm and since coming on board, has ramped up in several specialities like mother and childcare and oncology.

" The asset has more than 1,200 beds across Pune, Ahmednagar ( now Ahilyanagar) and Nasik with further expansion plans in the state and will be attractive to those players not present in Maharashtra or western India. Sahyadri Hospitals is expected to clock around Rs 240 crores in ebidta for FY25 and the sale will be a valuation discovery process," the report had added.

As part of its first control private equity buyout in India, on August 16, 2022, OTPP announced an agreement to acquire a significant majority stake in Sahyadri Hospitals Group  from the Everstone Group with reports pegging the valuation of the hospital chain at around Rs 2,500 crore.

Sahyadri Hospitals was established in the year 1994 with Pune Institute of Neurology exclusively dedicated to Neurology and Neurosurgery. Dr. Charudutt Apte, Sadanand Bapat and Nitin Desai are the founders and according to its website, the chain has 11 hospitals across Maharashtra, 50 plus lab collection centres, 2000 plus clinicians and 4000 plus expert staff.

Who will check into Sahyadri Hospitals? A look at the aspirants

Last month, Chinese drugmaker Fosun agreed to sell its minority stake in hospital group New Frontier Health which operates 11 hospitals and 24 clinics to Warburg Pincus . In 2024, the PE fund invested in Vietnam's Xuyen A, which operates 4 hospitals.

In the Indian pharma and healthcare sector, Warburg Pincus does not back any hospital chain but has invested in companies such as Meril Life Sciences, MedPlus, Laurus Labs, and Metropolis Healthcare. Last year it picked up a majority stake in Chennai based ophthalmic equipment and devices Appasamy Associates.

South-focused Temasek backed Manipal Hospitals , an IPO- bound firm, has grown inorganically via deals like Vikram Hospitals and Columbia Asia's Indian operations and has expressed interest earlier in the sale process of hospital chains like KIMS Healthcare ( which was acquired by Blackstone). At one stage, Delhi headquartered Max Healthcare was also eyeing the Kerala based asset.

In fact, in a separate m&a process involving Care Hospitals, which was owned by TPG backed Evercare Group, Max Healthcare had taken legal recourse over the sale to Blackstone. Later, the parties reached a settlement.

In September, Prem Kumar Nair, Group CEO of IHH Healthcare said the firm intends to stay and grow in India with Fortis and Gleaneagles, the "twin growth engines."

"If we do some acquisitions along the way, we will add another 1,000 or 2,000 and that's why I said between the two ( Fortis + Gleneagles), we'll probably have about 10,000 beds in a few years' time," Nair said in interview to CNBC-TV18 in September.

Nair added, "For a strategic acquisition or a big acquisition to take place, we have got several criteria. First, it must be in a market or in an area. Of course, there must be significant demand, and we look at the competitive situation. We want to get facilities that have the highest clinical quality. Secondly, we put a lot of emphasis on patient outcomes. Thirdly of course, it must be accretive within 2-3 years."

In February, KKR announced that it has agreed to acquire a controlling stake in top cancer treatment chain HealthCare Global Enterprises Ltd (HCG) from CVC Partners for around $400 million. That's not all. In August, the investment firm also sealed the buyout of a controlling stake in Kerala based Baby Memorial Hospitals. KKR, was earlier an investor in Max Healthcare and exited later via mega block deals.

EQT has invested more than $6bn in India over the last 21 months and in December , Jean Salata, Chairperson EQT Asia and Head of Private Capital Asia said that the buyout market is "underpenetrated" in India and EQT seeks to replicate the success achieved by the firm earlier in the IT services segment with similar, control deals in the healthcare and financial services segment.

In November, the world's largest private equity player Blackstone struck India's biggest healthcare deal by sealing a merger of its portfolio firm Quality Care India Ltd with Moopen family-founded Aster DM Healthcare, creating a combined entity valued at around $5 billion. The transaction led to the US firm reaching the top 3 club in India in terms of bed capacity at hospitals.