Global buys Chennai hospital for Rs 257cr

The Hyderabad-based Global Hospitals, part of Ravindranath GE Medical Associates, has acquired Sri Kanchi Kamakoti Sankara Hospital (formerly Tamilnad Hospital) in an all-cash deal, for Rs 257 crore to be paid in tranches.

The Madras High Court on Monday permitted Sri Kanchi Kamakoti to encash the earnest money deposit of Global Hospitals and complete the sale of the property. The Chennai-based Sankara Hospital, abutting the Old Mahabalipuram road, is spread over 46 acres and has 450 beds.

In July 2006, a division bench of the Madras High Court had permitted the Sri Kanchi Kamakoti Peetam Charitable Trust to sell the Sankara Hospital. The trust, in its application to sell the hospital, said it could not run it and had become heavily indebted.

Subsequently, corporates and healthcare majors, including the Murugappa group, Satya Sai Hospitals of Chennai, Bangalore-based Shriram Properties, Kolkata-based Advanced Medical and Research Institute and Global Hospitals bid for the property. Global emerged winner by quoting Rs 257 crore and assuring that it would run the existing hospital, retain the employees and provide 50 free beds.

"We plan to transform the Sankara Hospital into a 'Health City' by incorporating facilities like liver, kidney and a multi-organ transplant institute, a heart and lung institute, neuro sciences, trauma, orthopaedic and cancer institutes and providing alternative therapy in the next 5 to 10 years at an investment of around Rs 750 crore. We also plan to construct service apartments. Subsequently, we will also increase the number of beds to 1,000," K Ravindranath, chairman of Global Hospitals, told mediapersons here on Tuesday.

On the fund-raising mode for the expansion of Sankara Hospital, he said Global would probably dilute some of its equity. "We are currently negotiating with two international private equity investment firms, one in the US and the other in the UK, for the purpose. Despite diluting some equity, Global will still hold a majority stake," he said, while refusing to disclose their names. According to him, Global will add 150 beds to Sankara Hospital in the next five to six months. The hospital would become fully functional by the end of this year.