Temasek, the Singapore government’s investment arm, has 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 earlier told FE it was pegged at an enterprise value of ?40,000 crore, and the 41% stake would be valued at ?16,400 crore. This makes it the largest deal in the Indian healthcare sector.
According to a joint statement issued by Temasek and MHE on Monday, Temasek would be acquiring the additional stake from investors global alternative asset management firm TPG Capital Asia and National Infrastructure Investment Fund (NIIF). The deal is subject to regulatory approvals.
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TPG Capital, which first invested in MHE through TPG Asia VI fund in 2015, will fully exit. However, it will re-acquire an 11% stake in MHE through its new Asia fund – TPG Asia VIII. NIIF, an investment platform anchored by the Indian government, will exit by selling its entire holding in the hospital chain.
On the completion of the deal, Manipal Group – the promoters of MHE – would hold a 30% stake in the hospital chain, and Temasek a 59% stake (of which 18% would be held through Sheares Healthcare Group, a wholly-owned subsidiary and independently-managed portfolio company of Temasek). TPG, which is selling the stake, will re-acquire a 11% stake in MHE through its new fund, TPG Asia VIII.
TPG had first invested in MHE through TPG Asia VI in 2015.
Bengaluru-headquartered Manipal Hospitals currently serves over 5 million patients a year through its network of 29 hospitals across the country. Allegro Capital was the financial advisor on this transaction.
In an interview to Moneycontrol, Manipal Group chairman Ranjan Pai said that the group does not want to offload further stake, it believes in the long-term potential of this business.
He also said that Sudarshan Ballal will continue as the chairman, while Dilip Jose would continue as the CEO.
MHE was founded in 1991 by Ramdas Pai, now its chairman emeritus.
“Since our investment in 2015, we have witnessed Manipal’s transformational journey of becoming one of the largest, best-managed and patient-centric healthcare networks in India. By re-investing through our new Asia fund – TPG Asia VIII, we look forward to continuing to support Manipal’s mission of bridging the quality healthcare infrastructure gap in the country,” Puneet Bhatia, co-managing partner of TPG Capital Asia, was quoted in the release.
According to Padmanabh Sinha, executive director and chief investment officer, private equity at NIIF, the company had made the investment through its strategic opportunities fund (SOF).
“We made this investment when elective procedures and medical tourism were at a standstill due to the pandemic, and the timing of recovery was uncertain. Our investment in Manipal is a good example of SOF’s strategy to invest in high-growth businesses which can become market leaders in India,” Sinha added.