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Actis, the UK-based private equity major, which was desperately looking for exiting its controlling stake in Ahmedabad's based Sterling Hospitals, has decided to sell the stake back to the promoters- Girish Patel and his family — the erstwhile promoters of Paras Pharma, who created strong brands like Moov, D'Cold and Livon. Financial details of the deal have not been disclosed.
Though Actis had given a sell mandate to JM Finance in 2011, it couldn’t find a buyer and the sell-off plan was kept on hold for the past year. By middle of 2013, Actis had given a sell mandate to Kotak Investment Banking.
It was in July 2006 that Actis had acquired a 41% stake in Sterling Addlife India Ltd, which owns Sterling Hospitals, for $15.5 million. Actis had later raised its stake to 80%. The remaining stake is with Girish Patel. When contacted, Patel did not wish to comment on market speculations. J M Trivedi, South Asia head of Actis too did not wish to comment.
When Actis had given the sale mandate in 2011, the PE major was looking for an enterprise value of Rs 550-600 crore. It had discussion with hospital chains such as Fortis and Apollo, beside global entities such as Parkway Hospitals. According to reports, HealthCare Global (HCG) had made a bid over Rs 450 crore, but backed out later.
Sterling has seven multi-speciality hospitals across Gujarat. Those at Ahmedabad, Vadodara, Rajkot and Bhavnagar are tertiary care multi-speciality ones while two others, at the Mundra Special Economic Zone and at Adipur (both in Kutch) are secondary care hospitals, with plans to upgrade to tertiary care hospitals. Sterling also operates a cardiac centre at Mehsana.
Actis was an investor in Patel founded Paras Pharma, the personal care products company. In 2010, Actis had sold its 63% stake in Paras Pharma to Reckitt Benckiser for around Rs 2,100 crore.
Actis had been looking to sell its stake in Sterling for a while now. Only recently, Bangalore-based Temasek and Premji Invest backed HealthCare Global and Olympus Capital backed DM Healthcare were in fray to buy Sterling. Earlier too there were reports that Khazanah-backed Parkway Holdings and India Value Fund Advisors were interested in acquiring Actis' stake in Sterling. However, the deals did not go through.
Sterling's turnover was estimated to be around Rs 250 crore in 2011, and is around Rs 275 crore at the moment. While the deal size is not known, it is estimated to be above Rs 400 crore.
Sterling has over 1,000 beds in its hospitals across seven locations, Ahmedabad, Vadodara, Rajkot, Bhavnagar and Mehsana besides smaller units at Mundra special economic zone and Adipur at Kutch.
Actis and Girish Patel have had a long relationship. Actis was also the investor in Patel founded Paras Pharma, the personal care products company. In 2010, Actis had sold its 63% stake in Paras Pharma to Reckitt Benckiser for around Rs 2,100 crore, while Patel had made around Rs 1,000 crore by selling his 30% stake.
Patel, at that time, had told Business Standard, that he did not want to go for a listing of Paras Pharma to offer an exit to Actis with a 30% stake.
"If I would have had over 50% stake in Paras, I would have definitely gone for a listing," he had said. Patel had begun his career early, at the age of 16, in a firm run by relatives. He had built Paras Pharmaceuticals with his brothers Darshan and Devendra, who had exited the company and on both occasions, Actis had picked up the stakes.
2006: Actis invested $15.5 million (Rs 69 crore) for 41 per cent in Addlife Medical Institute, which owns Sterling Hospitals.
Year by year, Actis raised its stake to 80%
2011: JM Financial was appointed to sell Actis' stake, eyes total value of Rs 600 cr
Negotiated with Fortis, Apollo, Parkway Hospitals.
2012: Sale plan kept on hold
2013: Kotak Mahindra I Bank was given a sell mandate
Negotiated with Bangalore-based Healthcare Global
2013 Dec: controlling stake was sold back to promoters - Girish Patel & family
