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Lenders tap domestic companies to buy Vasan Healthcare

A group of lenders led by IndusInd Bank has reached out to a new set of potential buyers for Chennai-based Vasan Healthcare, two sources familiar with the development told FE.

By: | Updated: September 17, 2016 6:57 AM
vasan-L Sources added that TPG and GA which were initially approached by the banks have already finished preliminary due diligence of the company but are yet to sign an indicative term sheet.

A group of lenders led by IndusInd Bank has reached out to a new set of potential buyers for Chennai-based Vasan Healthcare, two sources familiar with the development told FE.

While the lenders were understood to be in talks with global PE giants TPG and General Atlantic for a possible buyout deal since May this year, they have now decided to also approach domestic healthcare players such as Piramal Healthcare, Trivitron Healthcare, Apollo Hospitals and Hyderabad based Krishna Institute of Medical Sciences ( KIMS).

Vasan Healthcare operates one of the largest eye care clinic chains in India, owes close to R1,100 crore to banks and has been struggling to manage its finances due to falling revenues and widening losses, sources said.

Sources added that TPG and GA which were initially approached by the banks have already finished preliminary due diligence of the company but are yet to sign an indicative term sheet.

“Both TPG and GA continue to remain in the fray but have now decided to reach out to more domestic bidders,” said a senior banker involved in the talks. “The dominant view is that foreign funds may find it hard to convince their limited partners to invest in Vasan given the controversies surrounding it,” he added.

Sources added that while both Piramal and Apollo have evinced interested in acquiring the entire operation of Vasan, Trivitron and KIMS are only interested in some key markets. Meanwhile, responding to an email query in this regard a TPG spokesperson said, “TPG follows a strict disclosure policy and hence is unable to confirm or deny these suggestions about our interest in the company. Sources said that AM Arun, founder and chairman of Vasan Healthcare is also independently trying to find an investor. Email queries sent to General Atlantic and AM Arun, went unanswered.

Arun, it is understood was in talks with foreign PE funds for a funding round in the company but has not been able to close the deal as allegations of money laundering surfaced against Vasan Healthcare sometime in September last year.

Currently, two of Vasan’s minority investors; PE funds Sequoia Capital and Westbridge Capital are under an investigation by Enforcement Directorate (ED) investigation for their respective investments in the company.

The charges are being contested by both PE funds. Sources said that the lenders are expecting a valuation of close to Rs 1,500 crore for the eye care chain which is roughly 15 times of its Ebitda. “But a final price will be decided on negotiations,” said a senior banker involved in the talks.

However, sources said that the lenders as per the last available financial results of the company with RoC, Vasan Healthcare incurred a loss of Rs 50.3 crore against revenues of Rs 728 crore for FY14. In the same year the company incurred operating expenses of Rs 597 crore and interest cost of Rs 85 crore.

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