Manipal’s Dream Of A Pan-India Footprint Comes To A Halt As Medanta Talks Fail

Manipal group’s ambition to have a pan-India footprint in healthcare has come to a halt for the second time with discussions to acquire Medanta hospitals ending in failure, two people aware of the matter said.

Manipal hospitals, backed by US private equity investor TPG Capital, had entered into negotiations with heart surgeon Naresh Trehan and other investors in October 2018 to acquire their stake in Medanta, after Malaysia’s IHH healthcare outbid Manipal to buy Fortis Healthcare Ltd. However, nearly a year after, the discussions have been called off.

The people cited above said on condition of anonymity that Manipal could not raise the money for the Rs 5,800 crore deal. They also blamed “valuation mismatch” for the failure of the deal.

“Manipal had two strong investors who were keen to fund them, but there was a valuation mismatch. The investment has to make sense for all parties,” said one of the two people cited above.

The TPG-Manipal combine started exploratory talks with the owners of Medanta in October to buy a majority stake in the hospital chain. “However, Manipal could not secure finances to close the deal,” the second person said.

The Manipal Group was looking to acquire the group which runs hospitals in Gurugram, Patna and Indore, and is also in the process of adding over 2,000 beds in Noida, Patna and Lucknow.

Trehan, his family and associates own 55% stake in Medanta. Private equity fund Carlyle owns 27%, while Singapore’s Temasek holds 18% in both Medanta and Manipal.

The failure of the deal also ends Manipal’s dream of vastly expanding its footprint in the North. In one stroke, Manipal would have been neck and neck with Apollo Hospitals in terms of bed strength. At present, Manipal owns 10 multi-speciality hospitals, five teaching hospitals and several fertility clinics. It is present in Bengaluru, Mangalore, Vijayawada and Goa. Acquiring Medanta would have increased Manipal’s bed strength from 6,000 to 9,000s, which is just about the number of beds in Apollo. With the deal, Manipal-Medanta would have been at 1,800 beds in the NCR region.

For Medanta, the deal failure is not cause for concern, the people cited above said. “Medanta was never on a look-out. In fact, Manipal approached Medanta. Medanta has its expansion plans in place and hence this deal ending in failure doesn’t cause any worry to Medanta” the second person said.

Text messages sent to Ranjan Pai, promoter of Manipal Education and Medical Group and an email sent to Medanta’s Trehan remained unanswered till press time. – Livemint

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