Temasek deal to help cut debt, plan expansion: Manipal Group chairman

Manipal Health Enterprises (MHE) intends to use the funds it received from Temasek to pare debt and for its expansion plans, including setting up of an average 300 beds every 12-18 months. It also does not have plans to offload further stake, while an initial public offering (IPO) would be the exit route for the investors in the company.

“A part of the proceeds would be used to reduce debt in the holding company, partially for our expansion plans and investing in existing businesses. That is why we stitched up this large deal. We are looking at adding more hospital beds inorganically, and we will also put up an average 300 beds every 12-18 months through greenfield projects,” Manipal group chairman Ranjan Pai told FE in an interview.

Also Read: Temasek inks pact to acquire additional 41% stake in Manipal Health Enterprises

The shareholders of the group would also “pool in” resources, if additional investment is needed at later stages, he said, adding the sector has been witnessing growth, especially from tier-II and III cities.

He, however, did not reveal the debt the group has.

On Monday, Temasek, Singapore government’s investment arm, entered into an agreement to acquire an additional 41% stake in Manipal Health Enterprises (MHE), increasing its stake in the hospital chain to 59%. While the companies did not disclose the deal size, sources had earlier told FE it was pegged at an enterprise value of Rs 40,000 crore, making it the largest deal in the Indian healthcare sector.

Manipal Group does not have plans to offload any more stake. While Temasek already has a board seat, it will get board control following the deal. At present, Temasek has two directors on MHE’s board.

“An initial public offering (IPO) would be the exit way for the investors in MHE, but I think Temasek want to stay longer. On IPO, we don’t have anything in the near-term, we will examine it from time to time. We will do an IPO when the time is right,” Pai said.

Also Read: Temasek buys majority stake in Manipal

The company, which closed a deal to acquire Emami Group’s AMRI Hospitals, is awaiting certain approvals for closure of the deal. Following the completion of the AMRI deal, the company would have 9,400 beds. At present, Bengaluru-headquartered Manipal Hospitals has 8,300 beds at 29 hospitals across 16 cities in the country.

“We will keep exploring and looking at other brownfield opportunities to continue to expand and grow the platform,” he added.

The group will continue to grow its group’s educational (a not-for-profit initiative) and health insurance ventures. The group will invest further in edtech platform UNext Platform (a subsidiary of the Manipal Education and Medical Group) and in ManipalCigna Health Insurance.