MC EXCLUSIVE Manipal Hospitals & EQT emerge front-runners for buyout of Ontario Teachers backed Sahyadri Hospitals

A final call on the preferred or chosen bidder is likely to be taken in the next few days

Temasek and Dr Ranjan Pai led Manipal Hospitals and Swedish PE major EQT have emerged as the two lead contenders post submission of binding bids for the proposed acquisition of Canada's Ontario Teachers Pension Plan (OTPP)-owned Sahyadri Hospitals, multiple industry sources in the know told Moneycontrol.

A successful buyout would bolster the pan-India presence of Manipal Hospitals ahead of a big-bang listing on the domestic bourses. A final call on the preferred or chosen bidder is likely to be taken in the next few days, these sources added.

Blackstone and TPG-backed platform AsterDM Quality Care India( jointly controlled by Blackstone and Aster promoters post-merger) and Malaysia's IHH, which operates Fortis Healthcare and Gleneagles, are the other suitors in the fray for the hotly-contested healthcare deal.

The Pune-based asset, the largest private multi-speciality hospital chain in Maharashtra, is controlled by Canadian pension fund Ontario Teachers' Pension Plan ( OTPP), which is betting big on India to achieve its target of hitting $300 billion in net assets by 2030.

On June 3, Moneycontrol was the first to report that the four players above had submitted binding bids for the transaction with bids expected in the region of Rs 5,500 crore to Rs 6,000 crore.

Email queries have been sent but an immediate comment could not be elicited from OTPP, Manipal Hospitals and Dr Ranjan Pai. This article will be updated as soon as we hear from these parties. When contacted, EQT, Blackstone and IHH declined to comment.

Rival private equity firm KKR, which backs Baby Memorial Hospital and cancer care hospital firm HCG, had also expressed interest earlier in the Sahyadri Hospitals transaction. On June 2, it announced a $600 million credit facility to the diversified Manipal Group, its largest India credit deal.

South-focused and 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 eventually acquired by Blackstone).

If Manipal Hospitals wins the race, the current domestic leadership positions in the hospital segment may be rejigged in terms of bed capacity, ebidta and revenues. Apollo Hospitals and Max Healthcare are the other two key strategic players, along with Quality Care India.

Swedish private equity major EQT, which backs Hyderabad based AIG Hospitals and top fertility chain Indira IVF, has invested more than $6 billion 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.

A closer look at Sahyadri Hospitals

As part of its first control private equity buyout in India, on August 16, 2022, OTPP had 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 ( father of actress Radhika Apte), Sadanand Bapat and Nitin Desai are the founders and according to its website, the chain has 11 hospitals across Maharashtra, more than 50 lab collection centres, 2,000 plus clinicians and over 4,000 expert staff.

The Deal Story So Far

On January 23, Moneycontrol 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," the report had added.

Later, on March 10, Moneycontrol was the first to report that Singapore investment giant Temasek and billionaire Dr Ranjai Pai led IPO-bound Manipal Hospitals, IHH Healthcare, Swedish private equity firm EQT & rival KKR were among early-stage suitors in the fray for the largest private multi-speciality hospital chain in Maharashtra.

Blackstone and Warburg Pincus were also named as contenders in a subsequent report by Moneycontrol on April 7.