Canada's Ontario Teachers picks Jefferies for Sahyadri Hospitals sale; deal launch in March

As part of its first control private equity buyout in India, in August 2022, OTPP acquired a significant majority stake in Sahyadri Hospitals from the Everstone Group

Top Canadian pension fund Ontario Teachers' Pension Plan Board (OTPP) has engaged investment bank Jefferies as an advisor for the sale of its portfolio firm Sahyadri Hospitals, the largest private multi-speciality hospital chain in Maharashtra, multiple sources in the know told Moneycontrol on the condition of anonymity.

"The plan is to have two sell side bankers for this process. Jefferies has been taken on board and another domestic I-bank will be picked shortly by OTPP.  The deal will be launched by mid-March," said one of the persons above.

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. Existing sponsor, Everstone Group, along with key management and founders will retain minority stakes in the company, the announcement had added and reports had pegged the valuation of the hospital chain at Rs 2500 crore.

"Today, OTPP owns nearly 100 per cent of the firm  and since coming on board has ramped up in several specialities like mother and child care and oncology, among others. 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 ," a second person added.

A third person added that there is significant inbound interest from both strategic as well as private equity players for the deal.

"Sahyadri Hospitals is expected to clock around Rs 240 crores in ebidta for FY25 and the sale will be a valuation discovery process," this person elaborated.

All the three persons above spoke to Moneycontrol on the condition of anonymity.

An email query sent to OTPP and Jefferies was left unanswered at the time of publishing this article.

Strategic suitors like south-focused Temasek backed Manipal Hospitals and Delhi headquartered Max Healthcare have expressed interest in earlier sale processes of hospital chains. 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."

But its the bulge bracket global private equity funds which have been aggressive on the inorganic front.

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.

Earlier in October, Moneycontrol was the first to report that KKR had entered exclusive talks to acquire a controlling stake in CVC Capital-owned cancer hospital chain HealthCare Global Enterprises Ltd (HCG).

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.

The OTPP India Strategy

OTPP is betting big on India to achieve its target of hitting $300 billion in net assets by 2030. " We have more than $3 billion invested in India, and it’s one of the key strategic countries we are focused on as part of our strategy to reach $300 billion in net assets by 2030," the firm's 2022 annual report said.

In December, Mumbai-based supply chain financing platform Mintifi raised $180 million (approx. Rs 1,494 crore) in its Series E funding round, co-led by Teachers’ Venture Growth (TVG), the late-stage venture and growth equity arm of Ontario Teachers’ Pension Plan, and Dutch technology investor Prosus.

In the same month, OTPP made an investment in Omega Healthcare Management Services, a leading technology-enabled healthcare management solutions provider and joined Private Equity at Goldman Sachs Alternatives as Co-Lead investors.  Terms of the transaction were not disclosed.