Manipal hospitals may buy Hyderabad's Star Hospitals


HYDERABAD | MUMBAI: Backed by the investments from global private equity giants, Manipal Hospitals, which has been looking to expand its presence both in India and abroad, is in advanced talks to buy Hyderabad's multispecialty hospital chain Star Hospitals. 

The due diligence process with the help of investment bankers is currently on, valuing the Hyderabad-headquartered healthcare services provider at about ?500 crore, three persons familiar with the developments told ET. 

"The due diligence exercise is currently going on and the Star Hospitals' promoters are weighing various options, including a complete exit at an attractive valuation," said one of the persons in the know of things. 

"Some healthcare majors/investors have shown interest. However, the talks are now at a preliminary stage," said a Star Hospitals' spokesperson, refusing to elaborate on the negotiations with Manipal Hospitals 

Manipal Hospitals' managing director Ranjan Pai too refused to comment on the status of negotiations with Star Hospitals. "While I don't want to comment on any particular transaction, we keep evaluating proposals that come our way," Pai said. 

Manipal Hospitals' move comes weeks after Singapore's private equity giant Temasek Holding reportedly agreed to buy 18% stake in it held by private equity firm True North for about ?1,400 crore, valuing the Bengaluru healthcare giant at around ?7,800 crore. Another global PE giant TPG Capital currently owns a significant minority stake of 22% in it. 

The Ranjan Pai-controlled Manipal Hospitals, the third-largest Indian hospital chain after Apollo and Fortis, currently has 15 hospitals across Karnataka, Tamil Nadu, Andhra Pradesh, Delhi, Rajasthan, Goa, Malaysia and Nigeria with a capacity of around 5,000 beds. Pai had told ET in March that the hospital chain was looking to raise funds to partly finance its acquisitions. 

Gopichand Mannam, Ramesh Gudapati, Jairaj Kumar Penukonda, Nagarjuna Reddy Penugoti and Chinta Venkata Reddy-promoted Star Hospitals currently operates across Hyderabad in Telangana and Visakhapatnam in Andhra Pradesh with nearly 500 beds. 

The promoters led by two cardiologists Gopichand Mannam and Ramesh Gudapati hold little over 52% stake in the hospital firm Unimed Health Care. The rest is spread among others, including some doctors at the firm, which reported over ?175 crore of revenues last fiscal ending March 2017. The nearly ten-year-old Star Hospitals had commenced its Hyderabad operations in 2008 and expanded to Visakhapatnam last year.