KKR in final talks to acquire controlling stake in HCG; negotiations on over founder’s role

KKR is looking to acquire CVC’s 60.36 percent stake in HCG at Rs 425-450 per share.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

KKR is in advanced negotiations to acquire a controlling stake in Healthcare Global Enterprises Ltd (HCG), India’s largest cancer care hospital chain, from private equity firm CVC Capital Partners, reported The Economic Times, citing unidentified sources. Moneycontrol was the first to report KKR’s exclusivity pact with HCG in October, as the firm emerged as the frontrunner, beating rival bidder Bain Capital.

The deal, which could be finalised by January, involves KKR acquiring CVC’s 60.36 percent stake at Rs 425-450 per share, a 10-15 percent discount to HCG’s closing price of Rs 510 on Tuesday. This translates to a stake valued between Rs 4,663 crore and Rs 4,935 crore, compared to CVC’s initial acquisition cost of Rs 1,049 crore in 2020.

KKR’s acquisition bid will trigger a mandatory open offer for an additional 26 percent of HCG’s shares from public shareholders. The deal is likely to result in KKR becoming the majority owner, with the possibility of delisting HCG if its total stake exceeds 90 percent after the open offer, reported ET.

Founder’s role at centre of discussions

The negotiations are on over the role of founder Dr BS Ajaikumar at the company post stake sale. KKR’s bid is subject to gaining control, which could require Ajaikumar to step down from the Executive Chairman position.

Also read | Policybazaar parent PB Fintech forays into healthcare services

Ajaikumar, who leads the founding family’s 10.87 percent stake, has expressed reluctance to sell his shares or relinquish his leadership role. “I made it clear, I am not selling,” ET cited Ajaikumar as saying.

HCG’s share price

HCG’s share price has gained over 49 percent over the last six months and over 14 percent in the past month alone, taking its market capitalisation to Rs 7,100 crore. For Q2 FY25, the hospital chain reported a 33 percent on-year jump in net profit to Rs 33 crore. Its quarterly revenue was the best ever at Rs 553.5 crore, up 14 percent from a year ago. EBITDA grew 21 percent to Rs 102.3 crore.

HCG operates 22 cancer centres across India and Africa, with 2,200 beds and seven fertility centres under the Milann brand. It recently acquired a 51 percent stake in Visakhapatnam-based Mahatma Gandhi Cancer Hospital & Research Institute for Rs 414 crore.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.