Mergers, Acquisitions and Negotiations, Galore!

The Indian healthcare market is poised to grow three-fold to USD 370 billion by 2022, making it one of the top-three healthcare markets in the world. With the Indian hospital sector coming back on track, after subdued performance for the last couple of years, it is no surprise that it has the attention of the investors.

Radiant Life Care, backed by investment firm KKR, had recently bought around 50 percent of Max Healthcare for Rs 2130 crore. It has now entered the fray to acquire Medanta, after the exclusivity period with Manipal expired, which has, with Temasek backing, been negotiating to acquire it for Rs 5500-6000 crore for over nine months. TPG Growth has invested Rs 500 crore by buying out small single-specialty healthcare businesses and scaling them. Its other arm, TPG Capital holds a minority stake in Manipal Hospitals. Overall, Asia Healthcare Holdings, founded by TPG has grown from a mere Rs 36 crore in revenue when it started in mid-2016 to about Rs 600 crore at the end of December 2018. And in just 30 months of its operations, Singapore’s Temasek Holdings has invested Rs 360 crore in AHH. Temasek already owns minority stakes in Manipal Hospitals, Medanta, and HealthCare Global Enterprises Ltd.

With a new CEO and CFO in place, Fortis Healthcare has declared profits for the past two quarters under its new owners, IHH. A favorite with the investors is Apollo Hospitals, as it takes steps to reduce its net debt from Rs 3256 crore to less than Rs 2500 crore by March 2020.

Expansion too is on the cards from the existing players. The Medanta group is planning to open 1000-bed hospitals in Gorakhpur, Varanasi, and Allahabad on the lines of the one being constructed in Lucknow. The foundation of a 700-bed hospital in Noida has been laid recently. Fortis will invest Rs 600 crore in expanding capacity and adding new technologies to its existing hospitals in Kolkata, Bangalore, New Delhi, and set up a new facility in Chennai. Aster DM Healthcare is planning to invest Rs 1000 crore to set up five new hospitals outside Kerala. CK Birla Hospital for Women plans to add 14 more hospitals across India with an investment of Rs 1000 crore by 2025.

In the midst of all this euphoria, however, there is no denying that India’s healthcare market, although lucrative, is extremely volatile.