Shares of Healthcare Global (HCG) soared 5 percent in early trade on September 27 after Bloomberg reported that the company's promoter, private equity firm CVC Capital Partners was looking for an exit by selling its controlling stake in the cancer hospital chain.
The PE firm is looking to identify buyers for its 60.4 percent in the hospital company, and can seek a premium of at least 20 percent and up to 50 percent for the buyout, depending on market conditions, Bloomberg's report stated quoting sources. According to data compiled by Bloomberg, CVC’s stake in HCG is worth about $345 million.
At 09.24 am, shares of Healthcare Global were trading 3.6 percent higher at Rs 354.40 on the National Stock Exchange.
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CVC's takeover of Healthcare Global was one of the most successful PE buyouts in the healthcare space. CVC Partners acquired around 59 percent stake in Healthcare Global for Rs 1,100 crore back in 2020. A recent report by brokerage firm Jefferies also highlighted that CVC's investment in the cancer hospital chain has increased 2.7 times in less than 3 years.
Post the acquisition, CVC appointed Raj Gore as the CEO of the cancer hospital chain. Gore had prior experience heading Apollo Hospitals' South region with 15 facilities under him.
Under new leadership, the pace of expansion of hospitals was slowed as the hospital had added 8 hospitals in 3 years which led to pressure on its balance sheet. Jefferies highlighted that under the new investors, the focus shifted to profitability which was achieved through tailor-made strategies for various hospitals.
"Cost reduction was undertaken along with a change in marketing strategy and building depth in oncology treatment care. Acquisitions were done selectively to balance growth like acquiring the remaining stake from partners in Nagpur facility and an oncology centre in Indore both of which were already profitable," the Jefferies report highlighted.
The above-mentioned decisions helped CVC showcase a turnaround in Healthcare Global's performance as pressure on its balance sheet significantly eased.
In the June quarter of FY24, the hospital chain posted a net profit of Rs 3.65 crore, up 47.2 percent from a year ago. Revenue from operations also jumped nearly 13 percent on year to Rs 459.71 crore.
Also Read | CVC mulls sale of controlling stake in HealthCare Global
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