General Atlantic LLC (GA), a leading US private equity (PE) firm, could pick up a minority stake in Wockhardt Hospitals Ltd, the healthcare entity of drug major Wockhardt.
While details are awaited, the deal size is learnt to be in the range of $80-100 million for a 20% stake. Although other PE majors like Blackstone and Carlyle were said to be in the race, Wockhardt has started final stages of negotiations with GA, according to a source.
Wockhardt Hospitals, which had withdrawn its initial public offer due to poor market response in February, was eyeing PE investments to meet its expansion plans.
GA, which has invested nearly $900 million globally in 12 healthcare companies, has investments in over 160 companies and has about $17 billion in capital under management. GA?earlier General Atlantic Partners?invests $50 million to $500 million in 8-12 companies a year.Vishal Bali, CEO, Wockhardt Hospitals, told FE,
?We are in negotiations with a number of players. But nothing has been finalised as of now.? A Wockhardt spokesperson said, ?We do not wish to comment.?
Wockhardt Hospitals Ltd had plans to raise about Rs 650 crore through its aborted IPO. The IPO of 2.5 crore equity shares would have made up 24.06% of the proposed post-issue, paid-up equity share capital of the company. Sources say the company is looking for the same valuation it sought at the time of IPO. Though the company initially set a price band of Rs 280-310 for its shares, it reduced the band to Rs 225-260 on the eve of the IPO.
A recent strategy for pharma firms is to hive off a part of their businesses and seek private investments in it. Glenmark had hived-off its generic business and it plans to go for an IPO, while Sun Pharma?s research arm is listed on the bourses. In April, FE had reported Piramal Healthcare?s negotiations with MPM Capital of the US to sell a stake in its hived-off research arm.
Wockhardt Hospitals had drawn up a Rs 900-crore, pan-India expansion, by adding 16 new hospitals to its chain of 15, by next March. The IPO was to fund this expansion. The company is pursuing the target to increase the number of beds to 3,300 from the present 1,474 beds by March 2009.
Out of the planned 16 new hospitals, 11 brownfield hospitals are to be started in Ludhiana, Varanasi, Bhopal, Surat and Goa, while five greenfield hospitals, built and owned by Wockhardt, will come up in South Mumbai, Delhi and Kolkata.