Temasek will buy controlling stake in Manipal at $4-billion valuation

In two successive merger and acquisitions (M&A) transactions, Manipal Health Enterprises is set to acquire Emami Group’s stake in AMRI Hospitals at a valuation of Rs 2,350 crore in the next few days.

Subsequently, Singapore-based private equity major Temasek will buy a controlling stake in Manipal Health Enterprises at a valuation of $4 billion (Rs 32,800 crore), banking sources said.

“Manipal will pay for Amri stake in two tranches. The first tranche of a higher sum will be paid upfront and the rest after about a year,” a source close to the deal said. Both deals will be signed before the fiscal year end.

Manipal, Emami, and Temasek declined to comment.

After signing of the agreement, Manipal Health will withdraw all pending court cases against Emami. Manipal had moved courts against Emami for going back on a sale plan agreed last year.

Fresh talks between Manipal Health and Emami started after an earlier deal at a lower valuation of about Rs 1,800 crore for AMRI fell through due to terms and conditions of the deal and clearances from the West Bengal government. The state government has a 1.9 per cent stake in AMRI.

In November 2022, Manipal Health moved Delhi High Court to prevent the Emami Group from selling a majority stake in AMRI Hospitals to a third party or altering the management. Reports suggested that Max Healthcare entered the fray for AMRI with a Rs 2,700-crore bid. Max had earlier declined comment on this.

However, early February, both Manipal Health and Emami apprised the Delhi High Court that talks of settlement were still ongoing.

For Manipal, the AMRI acquisition will mean a wider presence in the East. Currently, AMRI operates four hospitals, of which three are in Kolkata and one in Bhubaneswar, with a capacity of about 1,100 beds, which can be increased to 1,200.

Temasek’s investments in Manipal is about six years old. It holds 20 per cent stake in the group’s health care business and will pick up another 25-27 per cent from both the Pai family and private equity firm, TPG. The Pai family holds 52 per cent in the entity and will continue to hold a significant stake of 25-35 per cent after dilution.

With backing from private equities, Manipal Health has been expanding its footprint and has emerged as the second largest hospital chain in the country after Apollo Hospitals. Earlier, it had acquired the Columbia Asia hospital chain in November for Rs 2,100 crore, taking its bed strength to 7,300 across 27 locations.

In June 2021, it bought Vikram Hospitals in Bengaluru from Multiples Private Equity (PE) for Rs 350 crore. The network is estimated to have 8,700 beds across 28 locations.

Industry observers expect the deal to be a win-win for Manipal and the Emami Group. For Emami, it will provide an opportunity to reduce debt and deploy resources in its core businesses of FMCG, edible oil, paper and realty. Business Standard