Hospital investors line up over $2 billion in exits
Ranjani Raghavan
MUMBAI: Several private equity firms are preparing to exit hospital investments to capitalize on abatement of the pandemic and a rebound in businesses of their portfolios, said several people aware of the matter.
Investors, such as True North, Creador and Everstone Capital, have either begun the process of exiting hospital investments or have initiated talks with buyers to sell their stakes in these assets. If the deals fructify, several hospitals could see a change in their shareholding structure over the course of the year.
For instance, True North Partners is considering an exit from Kerala-based KIMS Healthcare Management Ltd, where it had first invested in 2017. Investment bank ICICI Securities is running the transaction, two people familiar with the development said, requesting anonymity.
Similarly, Creador is in talks to exit its investment in Delhibased Paras Hospitals, and has appointed ICICI Securities to run the transaction, the people cited above said.
Everstone Capital is in talks to exit Sahyadri Hospital, while
Faridabad-based Asian Institute of Medical Sciences (AIMS) may also see investor exits, the people said. Everstone declined to comment while Sahyadri Hospitals did not respond to a request for comment. Mint reported last year that Everstone was preparing to exit Sahyadri Hospitals.
ICICI Securities declined to comment, while True North, Creador, Everstone, Paras Hospitals and AIMS did not offer comments on specific transactions.
“Covid waves have shown the supply lag in the sector and easing of Covid has brought in pent-up demand for many treatments that had been paused. Companies are now preparing for capacity building through organic route or consolidation, and this is leading to many hospital transactions in the offing,” said Satish Chander, partner, True North. “Well-run quality companies have created value as they have bridged demand-supply gap and have been good investments for investors over long periods,” Chander added.
The potential hospital deals and others could fetch PE firms a combined over $2 billion, said multiple investors and investment bankers.
“The entire industry is getting consolidated and given the demand-supply gap, there is ample investor interest for these transactions. Some assets are getting 16 to 17 term sheets from interested buyers,” said Vijay Datt, chief executive officer of Hyderabad-based investment bank Citadel Management Consulting. Some of these deals could fetch as much as 16-18 times in forward Ebitda (earnings before interest, taxes, depreciation and amortization) multiples, he said.
Some deals have already occurred or are on the verge of completion. Last week, Temasek International and TPG Growth acquired ADV Partners stake in Dr Agarwal’s Healthcare Ltd.
In March, news portal Moneycontrol reported that Baring Private Equity Asia emerged as the front runner to buy a stake in Hyderabad-based Asian Institute of Gastroenterology.