Everstone Group kickstarts prep to sell majority stake in Sahyadri Hospitals

Representative Image

Nearly three years after acquiring a controlling stake in Pune-based Sahyadri Hospitals, private equity firm Everstone Group has revived plans to exit the firm, which is the largest hospital chain in Maharashtra, multiple industry sources in the know told Moneycontrol.

“Everstone has engagement investment bank Rippledot Capital as the sell-side advisor for the proposed transaction. These are early days in the deal and they are looking to divest their majority stake in the firm,” said one of the persons above. Leading neurosurgeon Dr Charudutt Apte is the founder of Sahyadri Hospitals.

Two other persons told Moneycontrol that feelers have been sent to both strategic suitors as well as private equity funds for the deal, though more interest is expected from financial sponsors.

According to a fourth person, the FY23 Ebitda expectations of Sahyadri Hospitals are in the region of Rs 175 crore and the valuation expectation is around 15 times Ebitda, implying a price tag upwards of Rs 2,600 crore.

“These kinds of assets break even fast but may not have too much of scale. At these Ebitda levels, Everstone is likely to pocket very healthy returns if the transaction fructifies,” the fourth person added.

All the four persons above spoke to Moneycontrol on the condition of anonymity. Moneycontrol is awaiting an email response from Everstone Group, Sahyadri Hospitals and Rippledot Capital and has sent reminders. This article will be updated as soon as we hear from them.

In April 2019, Everstone had announced the buyout of a majority stake in Sahyadri Hospitals via a combination of primary and secondary capital with an intention to position it as the anchor asset of the former’s healthcare delivery platform. The deal valuation though was undisclosed.

On August 26, 2021, VCCircle had first reported that Everstone Group was preparing to exit Sahyadri Hospitals.

Rippledot Capital is a Singapore-based strategic and financial adviser to corporates, entrepreneurs and investors focused in the Asia Pacific region.

THE EVERSTONE STRATEGY

In an exclusive interview to Moneycontrol dated March 1, 2021, while responding to a query on sectors for fresh investments, Sameer Sain, the co-founder and CEO of Everstone Group said, “So, I would view healthcare/pharma, IT and business services and consumer as core to what we do. By the way, the reason is that those are structurally important and where we are long-term and even medium-term, very excited and very bullish when it comes to those three sectors."

Sain added, “You know, being bullish is one thing, having the right pricing and deal flow is another. And then there are certain sub-asset classes that you may not be so excited about, but we have a great healthcare asset at Sahyadri, that is in Pune, that is a high growth asset, that is a profitable asset. That is an absolutely amazing hospital chain with multiple locations and beds.”

In 2015, Everstone had sold its minority stake in Global Hospitals to Malaysia's Parkway Hospital. The group’s existing pharma and healthcare portfolio in India includes healthcare platform Everlife which invests in manufacturers and distributors in the region covering key strategic segments including in-vitro diagnostics, medical diagnostics, critical care equipment, implants and consumables. Cardiac stent maker Translumina and Slayback Pharma, a maker of complex generic and speciality pharma products are other portfolio companies in the segment.

According to its Linkedin page, Sahyadri Hospitals currently has 8 hospitals with 900 beds. It has more than 1,000 clinicians along with 2,300 supporting staff. The hospital chain provides services in the segments of Neurosciences, Haematology, Oncology & Oncosurgery, Cardiology & Cardiothoracic Surgery, Orthopaedics & Joint Replacements, Liver Transplant, General Surgery, IVF, Paediatrics, ENT , Ophthalmology, Nephrology, Urology and Tissue engineering.

HOSPITAL M&A IN THE PINK OF HEALTH AND CHEER!

The domestic hospital and healthcare space has been buzzing with deal activity as the economy gradually recovers from the impact of COVID-19.

Earlier on March 15, Moneycontrol reported that the promoters of Manipal Hospitals were in talks to buy a part stake from existing investor TPG ahead of an eventual IPO.

Moneycontrol also broke the news of Barings PE Asia emerging as the front-runner to pick up a significant minority stake in AIG Hospitals.

Back in January, Moneycontrol was also the first to report that TPG-backed Evercare was looking to exit Hyderabad-based Care Hospitals.