Temasek set to buy TPG’s Manipal stake


Temasek Holdings-owned Sheares Healthcare India has submitted the highest bid for TPG Inc.’s nearly 21% stake in Manipal Health Enterprises Pvt. Ltd, three people aware of the matter said, adding a deal would value the hospital chain above $4 billion.

The Singapore government’s investment firm Temasek already owns around 18.1% stake in Manipal Health, while the Indian sovereign fund National Investment and Infrastructure Fund (NIIF) holds around 8% stake.

Chain reaction

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Chain reaction

“The buyer has been identified,” one of the three people cited above said. “Only the finer details, such as whether NIIF and Ranjan Pai (Manipal Health founder) will also sell partial or full stakes held by them, is yet to be decided. Essentially, Temasek is willing to have a controlling stake in the entity, and final discussions are centring around that,” the person said on condition of anonymity.

Ranjan Pai may give up some of his stake and cede control to the Temasek platform, the people cited above said. The company does not require capital, and this deal is a precursor to an eventual public listing over the next 24 to 36 months, the people said.

When contacted, Pai said, “There are several moving parts in the deal,” declining to share further details. Queries emailed to spokespeople for TPG, NIIF and Temasek remained unanswered.

Temasek entered Manipal Health in 2017 when it bought out private equity firms True North and Faering Capital in a deal valuing the hospital chain at an enterprise valuation of $1.14 billion. Four years later, NIIF acquired a stake for $286 million.

Mint first reported TPG’s stake sale plan on 16 September, after a previous plan in which the promoters would buy back the PE’s stake in the hospital chain stalled. On 4 November, Mint reported that KKR and Temasek were in separate talks to seal the deal.

For TPG, which first acquired a 24.75% stake for 900 crore in Manipal Health in 2015, this deal will generate multi-fold returns. TPG is also separately preparing to sell its majority stake in Quality Care India Ltd, the parent of Hyderabad-based Care Hospitals.

Manipal Health has struck successful acquisitions in the past two years to bulk up its offering. In April 2021, Manipal Health acquired Columbia Asia Hospitals for 2,100 crore, expanding the chain’s total bed count to over 7,000 across the country. Thereafter, in July, it acquired Multiples PE-backed Vikram Hospital for 350 crore, giving it access to 300 more beds.

In FY21, it reported consolidated net sales of 1,813.2 crore over a loss of 138.1 crore, according to VCCEdge, likely because of an adverse impact of covid. It reported 547.1 crore profit on consolidated net sales of 3,975.2 crore in FY22.

Columbia Asia and Vikram Hospital would contribute a third of Manipal’s revenues for FY22, Manipal chief executive Dilip Jose was quoted as saying in a Hindu Business Line report earlier this year.

A credit rating report from India Ratings said occupancy levels at the chain rose from 49% in FY21 to 57% in FY22 due to the impact of the second covid wave.

In addition, during FY22, the chain’s management undertook “strong efforts to bolster profitability”, including by reducing corporate overheads, reducing headcounts and improving operating efficiencies, the ratings report said.

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