PE'S HEALTHCARE TAKEOVER

How global private equity and venture capital firms became majority owners of India's hospital chains.

- P.B.JAYAKUMAR

ABHAY SOI, 49, chairman and managing director of Max Healthcare Institute, India’s second-largest listed hospital chain by revenue, is a billionaire. Max Healthcare’s market capitalisation is over `79,100 crore. Soi-led promoter group held 23.74% stake as on March 31. This is in stark contrast to 14 years ago when Soi was not even an entrepreneur. Instead he was a financial restructuring expert who had done stints at Arthur Andersen, EY and KPMG before co-founding a $350 million special situations private equity (PE) fund. In 2010, he floated Radiant Life Care, which took over New Delhi’s BLK Hospital and Mumbai’s Nanavati Hospital. In 2017, U.S. PE firm KKR picked up a 49% stake in Radiant for $200 million. In June 2019, Radiant bought 49.7% in Max from Analjit Singh for `2,136 crore; the two merged to form Max Healthcare Institute. “Operational synergies resulted in cost efficiencies. The combined entity has a broader market presence and a better negotiation platform with external stakeholders such as suppliers and service providers,” says Soi. FIIs and FPIs like government of Singapore/GIC, GQG Partners and Blackrock own majority stake in the company.

Manipal Hospitals, based in Bangalore, is majority-owned by Singapore’s sovereign wealth fund Temasek, which increased its stake from 18% to 59% in March last year by investing nearly $2 billion in what was one of India’s largest PE deals that year. Temasek bought the stake mainly from primary investors such as TPG. Founder Ranjan Pai’s family now holds just 30% in the chain. ‘’PE support since 2015 has been helpful in expansion. We are looking at 14-15% rise in turnover to `8,000 crore in FY25,” says MD and CEO Dilip Jose. Before becoming the MD & CEO of Manipal in 2017, Jose was senior advisor to TPG Capital and MD of Care Hospitals heading Fortis Healthcare’s South India operations.