Metropolis eyes UK path lab acquisition

Mumbai-based Metropolis Health Services (MHS), a chain of diagnostic centres, is eyeing a UK-based pathological laboratory.

Sushil Shah, chairman of MHS, said, "We are targetting to acquire a pathological laboratory in the UK." The size of the acquisition will be between $5 million and $10 million.

According to Shah, the National Health Services (NHS) of UK has recently decided to outsource the allied medical work to the organisation based in the UK.

"To take the advantage of the outsourcing of medical work, we are planning to acquire a pathological lab in the UK," adds Shah.

Metropolis plans to acquire a secondary pathological lab in the UK. The company is presently in talks with one of the pathological lab and the entire process is in mid-stage.

Ameera Shah, Executive Director of MHS, said, "The basic idea is to take the advantage of outsourcing that will be allowed by the NHS and to have cost advantage."

Those pathology tests that needs more expertise and in-depth analysis will be sent to India for further tests. "Tests done in India will have the cost advantage of about 40-50 per cent," adds Ameera Shah.

The company will be funding its UK acquisition through the dilution of its equity stake to private players. The company is planning to raise Rs 100 crore.

In addition to this, the company will raise Rs 15 crore through internal accruals.

"From the pool of this fund, we will finance our UK acquisition and if needed we might raise funds through debt," Shah added.

The company is also planning to foray into the US. Initially, it will have two labs in the US. Presently, the company is in talks with some of the existing pathology labs in the US for a possible joint venture (JV). "In next two to three months we expect to finalise the JV," he said.

The basic purpose of forming a JV is to take the advantage of the local expertise of the US partners who are familiar with the US market.

While Metropolis will be pooling its resources and specialised expertise for its US venture. The labs will be based in the east and central part of the US.