HealthCare Global (HCG), the Bangalore-based cancer care hospital chain, is embarking on a Rs 400-crore expansion plan, which will double its presence. HCG has 25 specialised cancer centres across India, Asia and Africa, and it intends to rapidly add another 20 in its second phase.
HCG is backed by three funds —Azim Premji’s PremjiInvest, Milestone-Religare and Evolvence. The hospital chain is closing in on a major private equity (PE) deal that will see the company raise $100 million to fund the expansion and provide exit for some of the earlier investors. According to sources, HCG is understood to be in talks with global PE funds, including Temasek, and a deal is expected soon.
Sources say Temasek was close to signing the deal in November, but it could not be closed due to valuation differences. While the company is expecting it to be valued at Rs 1,000 crore, some PE investors are considering a valuation of Rs 800 crore, sources added.
“Most certainly, the deal is expected to be signed at an enterprise valuation of Rs 800 crore,” one of the investment bankers who has been tracking HCG told Business Standard. HCG has so far raised a total of Rs 150 crore through the PE route.
HCG, promoted by Dr B S Ajaikumar, has been expanding at a good clip and currently has annual revenues in the range of Rs 400 crore with 1,600 beds, with operating margins in the range of 17-18 per cent.
Sources inform that HCG will also look at building up a portfolio of multi-speciality hospitals, one of which will come up in Pune. HCG derives as much as 75 per cent of its revenues from cancer care. According to HCG’s management, while they will not go aggressively in multi-specialty hospitals, they will consider as and when a good opportunity comes up.
In addition to setting up their own hospitals, HCG also works with major hospitals in administering cancer care. Some of such notable arrangements include the one at Nanavati Hospital in Mumbai and Medica in Kolkata.
As and when HCG finalises the $100-million fund raise, it will be the fifth largest PE funding in the healthcare industry in the recent past.
During 2012, the healthcare industry was one of the most sought after sectors by attracting a total of $1.2 billion across 48 deals. Among others, there were four investment deals worth about $100 million in the hospitals segment including in Manipal Health Systems, Care Hospitals, DM Healthcare and Vasan Eye, according to a report by Venture Intelligence.
