Many suitors for Vasan Healthcare

South Africa's largest private hospital chain, Net Care, and Malaysia's IHH said to be in race for Rs 5,000-cr deal

More suitors are queuing for Chennai-based Vasan Healthcare. Sources said South Africa's largest private hospital chain, Net Care, was talking to private equity (PE) investors and promoters in Vasan for a majority stake.

In a deal expected to be Rs 4,500-5,000 crore, PE investors such as the Singapore government's sovereign wealth fund, GIC, Sequoia Capital and WestBridge Capital will exit Vasan. In 2012, GIC invested $100 million in the company in one of the largest health care deals by a PE investor in India.

Apart from Net Care, Malaysian hospital management company Integrated Healthcare Holdings has also evinced interest, sources said.

Vasan clocked Rs 750 crore in revenue in 2013-14 and has about 180 speciality eye care and 30 dental centres across the country.

Sources said Chennai's Spark Capital has been given the mandate to scout for buyers. Founded by A M Arun in 2002 at Tiruchirapalli in Tamil Nadu, Vasan is present in 16 states; it recently opened centres in Dubai (United Arab Emirates) and Colombo (Sri Lanka).

Net Care's private hospital and trauma services in South Africa comprise 55 owned hospitals, with 900 registered beds, 338 operating theatres and 87 retail and hospital pharmacies, according to the company's website.

Though the shareholding in Vasan is not clear, sources said the promoter has 55 per cent, GIC 20 per cent and Sequoia and WestBridge together 25 per cent. The two PE investors had together put in $50 million in three rounds of funding.

Emails to Vasan Chairman Arun and the spokespersons of GIC and Net Care remained unanswered till the time of going to press.

Rising demand

Against the backdrop of a rising gap between demand and supply in health care in India, hospital chains have been expanding, raising more capital from PE and strategic investors.

India has nine hospital beds for every 10,000 people against the UK's 33, the US' 30, China's 42 and Brazil's 24.

Last year saw the largest deals till date in the hospital sector. Carlyle invested $154 million in Medanta Medicity, IFC $100 million in Fortis Healthcare, Oppenheimer Funds $95 million in Apollo Hospitals and KKR Rs 550 crore in Apollo Hospitals Group.

This year, Olympus Capital and India Value Fund Advisors invested $60 million in Aster DM Healthcare, with a cumulative investment of $210 million.

The health care market in India, estimated to be $78 billion, grew 11 per cent on an average annually between 2008 and 2012. According to a CARE Research report, the hospital segment accounts for roughly 70 per cent of the total market.

WEALTH IN HEALTH

* Vasan Healthcare clocked Rs 750 crore in revenue in 2013-14

* Present in 16 states, Vasan recently opened in Dubai and Colombo

* India has 9 hospital beds for every 10,000 people against the UK's 33, the US' 30, China's 42 and Brazil's 24

* Health care in India grew 11% annually on an average in 2008-12