temasek: Blackstone, Temasek’s Sheares lead race for Care Hospitals

Blackstone, the world’s largest private equity group, and Temasek’s Singapore platform Sheares Healthcare have emerged as top contenders to buy Care Hospitals, multiple sources familiar with the development said. The deal could value Care, one of India’s largest hospital chains, at ₹8,000-8,200 crore (about $976 million to $1 billion), they said.

The race has heated up in recent weeks, with Blackstone emerging as the favorite so far.

Ahmedabad-based Torrent Group and acquisitions group CVC are also in the mix. Final rounds of due diligence are underway and binding offers are expected in the coming weeks.

The 2,400-bed hospital chain, owned by Evercare, a TPG Growth platform, also saw interest from Max Healthcare and Carlyle, among others. Investment banks Rothschild and Barclays are advising TPG on the sale process.

Spokespeople for Blackstone, TPG and Temasek declined to comment. CVC and Torrent did not respond to inquiries from ET.

ET, in its September 13 edition, was the first to report on Blackstone, Temasek, CVC and Max Healthcare’s interest in acquiring Care Hospitals.

Care has 15 hospitals in India and two in Bangladesh. Once the deal comes to fruition, this would be the second largest hospital purchase in India after the 2018 IHH-Fortis transaction.

If Blackstone emerges as the winner, it will mark the debut of the private equity (PE) specialty in the Indian healthcare market, as well as in South Asia.

Care Hospitals is expected to post revenue of $340 million in FY23, with Ebitda of $75 million, versus revenue of $211 million and $47 million Ebitda in FY22, a source said. Revenue is expected to grow between 15% and 29% this fiscal year.

The chain was started in 1997 as a 100-bed cardiac hospital in Hyderabad, by cardiologists Dr. B Soma Raju and Dr. N Krishna Reddy, along with associates. It has expanded to a network of 17 health centers in six states, with more than 2,400 beds offering 30 clinical specialties in India and Bangladesh. It has two hospitals in Dhaka, with 1,000 beds.

Through the acquisition of Indore-based CHL Hospitals, Care added 250 beds in July. In the same month, it acquired a “significant majority stake” in Aurangabad-based United Ciigma Hospital, its third such deal since April to consolidate and deepen its presence in fast-growing Tier II markets.

Concerned parties

In 2018, Evercare, backed by TPG Growth, acquired the healthcare portfolio of UAE healthcare fund Abraaj Growth Markets, which owned a majority stake in Care Hospitals. Abraaj had bought 72% of Care from Advent Capital for Rs 2 billion in January 2016. The Dubai-based company went bankrupt following allegations of mismanagement of its $1bn healthcare fund.

TPG is also selling its 20% stake in Manipal Hospitals, led by Ranjan Pai, and is in talks with private equity fund KKR. The PE group also has a majority stake in Motherhood Hospitals, a network of women’s and children’s hospitals in India. Blackstone was also one of the leading candidates to acquire the wholly owned injectables arm of Aurobindo Pharma, valuing the business at ₹26,000-30,000 crore ($3.4-4 billion). However, the deal was canceled due to a valuation mismatch.

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