Manipal holds about 60 percent, TPG owns 22 percent and Temasek 18 percent
Manipal Hospitals on November 2 said it is acquiring a 100 percent stake in Columbia Asia Hospitals for Rs 2,100 crore. The transfer of ownership to Manipal Hospitals will be complete after regulatory approvals.
Sources told Moneycontrol that Manipal will be acquiring Columbia Asia Rs 2,100 crore, of which 50 percent will be equity, and remaining will be debt.
According to Manipal Hospitals the acquisition will be funded through a combination of debt and equity, and the equity investment will be shared by Manipal and private equity investors TPG and Temasek as per their shareholding.
Manipal holds about 60 percent, TPG owns 22 percent and Temasek - 18 percent.
"It will be a good complementary asset for the group both in terms of strategic and geographic fit, and the kind of talent pool will be coming on board," Dr Ranjan Pai, Chairman, Manipal Education and Medical Group (MEMG), told Moneycontrol.
Pai declined to give financial details of the deal, but said that he expects to close the acquisition in about 60 days. He said the acquisition brings new geographies, but also some overlap.
"They (Columbia Asia) have three hospitals in the north, then Kolkata and Pune. It brings new markets for us, which is of interest. They will have some more hospitals in Bengaluru. Traditionally, we have been south-based so we have a lot of hospitals in the south, having said that good assets are hard to replicate, if it comes by, we will have to take it," Pai added.
Together, the combined entity will have a presence of 27 hospitals across 15 cities with 7,300+ beds and a talented pool of over 4,000 doctors and 10,000 employees.
Pai said that the buyout of Columbia was supposed to be announced in April, but was pushed back due to the COVID-19 pandemic.
"It has been tough six months, that's the reason we have delayed this acquisition, but we believe in long term needs of healthcare in this country, and private healthcare plays an important role. This was a good strategic fit in that sense, so for that reason we decided to press forward," Pai said.
Pai termed the valuation of the deal as "fair", and said they bought it for the on par valuation the asset was commanding in March. He added that with the country opening up, things are coming back to normal for the healthcare industry.
"We felt the right time to do it," he said.
On initial public offering, Pai said they are possibly looking at it in a medium term.
Break the jinx in third attempt
Manipal backed by United States PE investor TPG and Singapore government's investment company Temasek has been scouting for hospitals assets. The company was in race to acquire Fortis Healthcare, but lost out narrowly to IHH Healthcare. Its other attempt to acquire Medanta Hospitals, did not materialise.
Manipal's acquisition of Columbia Asia Hospitals is in continuation of a series of large scale consolidation that's happening in India hospital sector. A large hospital chain, will unlock economies of scale and bring in operational efficiencies and effective utilisation of resources, compared to smaller hospitals.Last year Radiant Life Care backed by PE firm KKR bought Max Hospitals, making it the second largest healthcare chain in India. IHH Healthcare acquisition of Fortis is one the largest deals in recent times.