MC EXCLUSIVE Post-Sahyadri buyout, Manipal Hospitals pivots to fast-track mode for mega IPO; seeks revised valuation from bankers

Post-Sahyadri buyout, Manipal Hospitals pivots to fast-track mode for mega IPO; seeks revised valuation from bankers

After sealing the buyout of Sahyadri Hospitals in July, Singapore investment giant Temasek- and Dr Ranjan Pai-backed Manipal Hospitals has switched back to IPO mode and sought a revised listing valuation from its syndicate of advisors for one of Asiá's hottest healthcare deals, multiple industry sources in the know told Moneycontrol.

"There was a pause on the IPO while Manipal Hospitals was participating in the competitive auction for Sahyadri Hospitals. Now, post the CCI approval, the firm wants to fast-track the process and kick-off the deal soon. An updated valuation check in current market conditions has been sought from the investment bankers ," said one of the persons above.

Kotak Mahindra Capital, Axis Capital, Jefferies, Goldman Sachs, JP Morgan and Motilal Oswal are amongst the i-bankers engaged earlier for the high-profile healthcare listing, two other persons said. Other banks may join the syndicate later if required.

According to a fourth person, "These are early days and a valuation target hasn't been finalised yet, but an IPO valuation of plus Rs 1 lakh crore ( $11.3 bn) may be on the cards for the pan-India hospital chain, which has more than 12,000 beds. If that is the case, then the firm can avail the relaxed IPO norms for large issuers recently introduced by Sebi, but it's not necessary that the route may be used. This is a marquee IPO targeted for mid-2026 and is expected to have great investor interest."

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

When contacted, Temasek said, "We do not comment on behalf of our investee companies, nor do we comment on market speculation. You may wish to reach out to Manipal Hospitals directly instead. "

An email query to Manipal Hospitals, Dr Ranjan Pai and the investment banks remained unanswered at the time of publishing this article.

Under Sebi's new norms, for issuers with a post issue market cap between Rs 1 lakh crore and Rs 5 lakh crore, there will be a minimum public offer of Rs 6,250 crore and at least 2.75 % dilution of the post issue market cap, as compared to Rs 5,000 crore and at least 5% dilution in the earlier regime.

At the end of days trade on September 15, the key listed rivals of Manipal Hospitals which also counts TPG as a backer, namely Apollo Hospitals Enterprise , Max Healthcare and Fortis Healthcare had a market-cap of Rs 1,12,380 crore, Rs 1,14,213 crore and Rs 73,778 crore respectively.

Manipal Hospitals on the prowl: Road to Dalal Street

On July 9, Bengaluru-headquartered Manipal Hospitals announced the acquisition of Pune-based Sahyadri Hospitals to strengthen its presence in the western market. The transaction received the CCI (Competition Commission of India) nod on September 2 and is expected to close in a month.

On July 5, Moneycontrol was the first to report that Manipal Hospitals had edged ahead of rivals suitors EQT and Blackstone and was poised to win the race for Sahyadri Hospitals with a bid with an equity value of around Rs 6,150 crore.

Since 2021, Manipal Hospitals has aggressively expanded via the inorganic route on its path to a mega listing. Prior to Sahyadri Hospitals, the firm has struck acquisitions like Vikram Hospitals, Columbia Asia's Indian operations and Emami Group's AMRI Hospitals.

In April 2023, Temasek sealed the largest deal ever by a private equity fund in the Indian healthcare sector by upping its stake and becoming the controlling shareholder in Manipal Hospitals. The Singapore investment giant shelled out around Rs 16,000 crore in a big-bang transaction valuing the hospital chain at Rs 40,000 crore to Rs 42,000 crore.

Post the transaction announcement, Dr Ranjan Pai told Moneycontrol in an exclusive interview , " I think consolidation will continue in the healthcare space. A lot more private equity funds will continue to invest large checks in the space."

When asked about the IPO plans, Dr Pai had added, "It will happen at the right time, no exact timelines set."

In July, when questioned if the proposed Manipal Hospitals IPO could potentially be one of Asia’s biggest healthcare IPOs, Ravi Lambah, the India head of Temasek and also the head ( strategic initiatives) at the firm told Moneycontrol , " Yes, that’s probably right. Because the size is there and the performance is good."

Sebi breather for large issuers

In a big relief for corporates eyeing mega listings, market regulator Sebi changed the rules of the game for such large issuers last week post its board meeting.

"For large issuers, diluting substantial stake through an IPO can pose challenges, as the market may not be able to absorb such a large supply of shares, which in turn may discourage such issuers from pursuing listing in India," Sebi said.

It added, "Regular dilution post listing impacts issuers until MPS requirements are complied with, may lead to price overhang due to the impending equity dilution, thereby adversely affecting the interest of existing public shareholders. Further, under the proposed MPO requirements, issuers are recommended to be permitted to list with a lower initial public float, hence, an extended period is required to allow them to achieve MPS of 25% in a gradual manner."

Extended period for large issues also do not pose risk of low liquidity in large size IPO. For large size companies, the revised Minimum Public Offer will still be large enough to provide sufficient stock to the market, including retail investors, and facilitate liquidity, the regulator said.

Accordingly , Sebi amended the existing provisions in terms of the minimum public offer and equity dilution for various categories of issuers based on the post issue market cap, including those between Rs 50,000 crore to Rs 1 lakh crore, between Rs 1 lakh crore and Rs 5 lakh crore and above Rs 5 lakh crore.

Who founded the Manipal Group?
The Manipal Group was founded by TMA Pai in 1953. Currently, the chairman is Dr Ranjan Pai and the group also has a presence in education and health insurance (ManipalCigna).

What is Claypond Capital?
Claypond Capital is the family investment office of Dr Ranjan Pai, which has made bets on firms like Zepto and Akasa Air.