India-based Manipal Hospitals, along with investment firms TPG Capital and Temasek, is reportedly getting closer to purchasing Global Health, which owns Medanta hospitals, at at Rs 5.8bn-Rs6bn ($819m-$847m).
This proposal was discussed at the board meeting of Medanta.
Citing multiple sources that are aware of the development, Economic Times reported that the parties are likely to enter into an exclusivity agreement to carry out due diligence by early next week.
Medanta’s founder and heart surgeon Naresh Trehan may retain his interest. About 55% of the firm is held by Trehan, his family members and cofounder Sunil Sachdeva.
The present proposal from Manipal is likely to see the exit of buyout fund Carlyle, which invested in Medanta five years ago.
In 2013, Carlyle had purchased a 27% stake from US-based Avenue Capital at a valuation of $600m.
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Set up in 2009, Medanta runs superspecialty hospitals and clinics across various Indian cities including Lucknow, Ranchi, Indore, Gurgaon, and Sri Ganganagar.
A person on condition of anonymity told the financial publication: “Carlyle, which was looking for a higher valuation, has finally agreed on the proposal last week and the Manipal-Medanta deal will go through quickly. The term sheet is expected to be signed in the next 8-10 days.”
TPG and Temasek will invest the money into Manipal in return for more stake to fund the deal.
In 2015, TPG had acquired a stake of 22% with an investment of about $146m in Manipal Education & Medical Group.
Singapore-based investment firm Temasek owns 18% of both Medanta and Manipal.
Manipal Education & Medical Group (Manipal Group) owns ten multispecialty hospitals in the states of Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Goa besides managing five teaching hospitals in Karnataka and Sikkim. It also operates many fertility clinics across the country.
It also owns a hospital in Malaysia and operates a clinic in Nigeria.
Manipal has been looking to invest in a hospital firm following its failure to buy Fortis Healthcare.