PE majors Blackstone, ChrysCapital join race to buy Healthium Medtech

The company is generating good response from the potential bidders as it is focusing primarily on products in surgical and post surgical as well as chronic care

American private-equity majors Blackstone and ChrysCapital and a slew of other private-equity funds have joined the race to acquire Healthium Medtech, maker of medical products.

This would cost the acquirer around Rs 6,000 crore. The company is one of the largest manufacturers of surgical needles and sutures in the global market. Apax Partners, the current owner, is selling the company to cash in on the high valuations commanded by medical-device firms.

Bankers said ChrysCapital was in talks with Ontario Teachers Pension Plan to make a joint non-binding offer for the company.

Blackstone, ChrysCapital, and Apax Partners did not comment on the matter. Ontario Teachers Pension Plan and Healthium MedTech did not respond to emails sent on Monday. Apax Partners had acquired Healthium Medtech in April 2018 for $350 million.

Earlier, TPG Growth Fund owned 73 per cent in the company while CX Partners, another private-equity fund, held 12 per cent.

The rest was held by the promoters. The company is getting a good response from the potential bidders as it is focusing primarily on products in surgical and post-surgical areas as well as chronic care.

It operates in 90 countries and key focus areas include wound care, arthroscopy, and infection prevention.

Credit-rating agency ICRA said Healthium witnessed a revenue growth rate of 14.3 per cent to Rs 728.5 crore in FY23 (excluding the discontinued UK business).

“Revenue growth was majorly supported by volume growth on the back of strong distribution network in the domestic markets, new product launches and established relationships with existing clients,” ICRA had said.

The operating margin of the company improved to 28.4 per cent in FY23 from 23 per cent in FY22 owing to a favourable product mix with increased revenue from the high-margin wound closure segment; the sale of the UK business, which had relatively low margins; and an enhanced backward integration for sutures by improving the cost efficiency of needles manufacturing facility and healthy operating leverage.

The company has generated revenues of Rs 394 crore with an operating margin of 27.6 per cent in H1 FY2024 and ICRA expects it to ring up healthy revenue growth in FY2024, while maintaining its strong margins.

In FY23, the company divested its Clini group, its UK business specialising in urology, to US-based private equity firm KKR & Co. The divestment, effective from January 12, 2023, resulted in net proceeds (after debt repayment) of Rs 762.4 crore and gains of Rs 490.3 crore. The business did not fit into the core product portfolio of the company because a majority of the Clini group products were related to the urology segment whereas Healthium’s strategic focus is on surgical devices used in operation theatres.

As on September 30, 2023, the company’s debt reduced to Rs 5.3 crore (Rs 303.1 crore as on March 31, 2022).

Healthium has introduced higher value-added products over the past few years, ranging from antimicrobial gloves and barbed sutures to meniscus guns and ligation clips.