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KKR frontrunner to acquire majority stake in HCG

Private equity firm KKR is now the front runner for a majority stake in the oncology-focused hospital chain run by cancer hospital group HCG owned by private equity firm CVC Capital, valued at nearly Rs 7,000 crore. This company had purchased its majority controlling stake in HCG for nearly Rs1,049 crore.

According to reports, KKR has started exclusive negotiations with CVC for the sale of a majority stake in the company. CVC owns 60.36% of the company, which is worth approximately Rs 3,613.97 crore at the stock’s closing price from last week. If KKR is able to acquire CVC’s stake, then it will trigger a mandatory open offer for an additional 26% stake owned by public shareholders.HealthCare Global, headquartered in Bengaluru, is the largest provider of cancer care in India. It has a network of 22 cancer centres in India and Africa. HCG operates seven fertility centres under the Milann brand.

In the June quarter, the hospital chain’s revenue grew 14 percent to Rs 525.6 crore and profit 59 percent to Rs 12.1 crore.HCG’s Ebitda for grew 21 percent to Rs 92.9 crore.

Earlier this month, HCG completed the acquisition of a 51 percent stake in Visakhapatnam-based Mahatma Gandhi Cancer Hospital & Research Institute for an enterprise value of Rs 414 crore.

The Indian hospital sector has turned out to be a goldmine for KKR, with the private equity firm making a $2 billion exit Max Healthcare in 2022, five times the capital it invested in the hospital chain in 2018.

While KKR had been selling its Max stake on the market through small block deals, in August 2022, it sold its remaining 27.5 percent holding worth around Rs 9,200 crore in the biggest ever block deal on the Indian market at that time, highlighting strong investor interest in the country’s hospital sector.

Following the Covid outbreak, the Indian healthcare services sector has seen billions of dollars of investment from private equity firms as well as public markets.

The sector has seen several IPOs in the last three years, including from Dr Naresh Trehan’s led Medanta Hospitals (Global Health Limited) Rs 2,205 crore IPO in November 2022.

Several smaller hospital chains such as GPT Healthcare Limited, Jupiter Life Line Hospitals, Yatharth Hospital, Rainbow Children’s Medicare, too, have tapped the public market in the last few years.

The county’s largest eye-care chain, Dr Agarwal’s Health Care Limited, backed by TPG and Temasek, filed the draft papers for its IPO in September to raise around Rs 3,000-3,500 crore. Siliconindia

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