Manipal Healthcare back on private equity deal street

Engages with TPG for fund raise which may scale to $200 million

Manipal Health Enterprises, among the established hospital chains in India, is back on the private equity deal street within hardly 18-months of raising $100 million in a marquee transaction from India Value Fund Advisors (IVFA). According to two investment bankers in the know about plans for the fresh fund raise, Manipal Health may be gearing to look at as much as $200 million over multiple tranches. The initial inflow is expected to be in the range of Rs 300 crore.

According to information available, a boutique investment bank based in Bangalore has been mandated for the fund raise and discussions with various private equity funds have been progressing. "Global private equity major TPG is among the few funds which are in discussions for the fresh fund raise," a senior investment banker who focuses on the healthcare space told Business Standard. A senior management official of Manipal Group too did confirm that talks have begun for the fresh fund raise, but declined to discuss the investors with whom they are in discussions with. TPG could not be reached for their views.

Investment bankers further added that Manipal Health is looking to grow to as much as 8,000 beds from around 5,000 beds through organic as well as inorganic routes and have lined up aggressive expansion plans in India as well as in certain overseas geographies including in South Africa. Manipal Healthcare early this year acquired an hospital in Malaysia, even as it is going aggressive on its inorganic strategy in India. In the recent past, Manipal Healthcare has acquired hospitals in Delhi and as well as in Jaipur and is looking at some good assets in Mumbai.

It is understood that IVFA which invested $100 million has options to invest further, based on certain performance parameters of Manipal Healthcare. Manipal Healthcare has over the past few years been most active on the private equity deal street having raised funds from Kotak Group and IDFC Private Equity among others.

According to IVFA, it partnered with Manipal Hospitals to support the expansion to other key cities in India and South East Asia in its drive to become a dominant player in the healthcare industry. "The investment decision was based on projections that the Healthcare Services industry in India could grow at over 12% per annum over the next five years as current healthcare infrastructure in India is inadequate to meet present and future demand for such services. Healthcare spending will be amongst the top three consumption categories in terms of growth and quantum of spend over the next 15 years," IVFA had noted.

While healthcare sector has been among the top three sectors which the private equity majors have been chasing, investments in the first quarter of 2014 have started on a positive note. According to PwC, PE firms have invested $2.4 billion across 99 deals, an increase of 14% in value and 15% in volume. Compared with Q1, the value of deals has doubled despite a 7% decrease in the volume. In Q1, the value of investments were $1.2 billion from 107 deals.