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Mubadala, Brunei’s Sovereign Wealth Fund look to pick up a slice of Manipal Hospitals

Singapore-based sovereign wealth fund Temasek is paring part of its controlling stake in Manipal Hospitals six months after it doubling down in the Bangalore headquartered hospital chain.

Temasek owned Sheares Health, is in advanced negotiations to sell 8-9% of its 59% interest in Manipal Health Enterprises to Abu Dhabi’ fund Mubadala and the sovereign wealth fund of Brunei, Brunei Investment Authority (BIA), said people in the know.

The valuation of Manipal for this transaction is similar to that of the April trade which saw Temasek valuing the chain at Rs 40,000 crore ($5 billion). Post this transaction it will continue to remain the controlling shareholder with 51% stake.

TPG retains an 11% stake in the hospital chain and the founding promoters the Pai family – which founded India’s first privately owned medical college in Karnataka’s Manipal town in 1953 – continue to own 30% in Manipal Hospitals. National Infrastructure Investment Fund (NIIF) fully exited in April selling their 8% stake in the hospital chain to Temasek.

“Temasek is rebalancing the portfolio by taking some money off the table. Also aligning with these funds that are also large LPs (limited partners) and include them in the cap table will help in future if large inorganic opportunities come by,” said a person aware of the developments.

Ranjan Pai chairman Manipal Education and Medical Group was unavailable for comment. Temasek declined to comment. Mails to Mubadala and BIA did not generate a response till press time Thursday.

Mubadala has so far invested about $4 billion in India, largely in the telecom and retail companies owned by Reliance Industries and the renewable energy division of Tata Power. BIA has $73 billion of assets under management (AUM) and has been backed marque hospitality properties like the Beverly Hill Hotels and Dorchester in London.

Manipal closed FY23 at a consolidated revenue of around Rs 4500 crore. According to India Ratings, FY22 revenues stood at Rs 4016 crore with an EBITDA of Rs 971 crore.

Manipal which emerged as India’s second largest healthcare provider by bed capacity, last week acquired 84% stake in Kolkata-based AMRI Hospitals from Emami Group at an enterprise value of Rs 2400 crores. The deal gave Manipal strong footprint in the Eastern India, which was otherwise predominantly relies on South India for bulk of its revenues.

Manipal is funding the acquisition through internal accruals and borrowings.

With the acquisition of AMRI Hospitals, Manipal will have a network of 33 hospitals across 17 cities with 9,500 beds, and over 5,000 doctors and an employee strength of over 20,000.

AMRI is Manipal’s third acquisition in the last three years. In 2020, it had obtained the Indian assets of Columbia Asia Hospitals for around Rs 2,100 crore. In June 2021, the Manipal Group had also bought out Bengaluru based Vikram Hospitals from Multiples Private Equity for around Rs 350 crore. The group is also ramping up its greenfield assets across India, which will be ready by FY25. In a media interacation Dilip Jose, managing director and chief executive, Manipal Hospitals told Mint, We would want to be present in Hyderabad and Visakhapatnam, if those opportunities present themselves, if those opportunities present themselves,” Jose said.

The chain is likely to look at a public listing in the future, it has said previously though no timelines had been identified, as yet.

Following the sale to Temasek, Pai paid down debt—nearly $400 million to clean up the group’s balance sheet— and has been looking to spend the rest of the windfall across newer opportunities using a newly created family office called Claypond Capital and an alternative investment fund. He’ has earmarked over $300 million in funds for startups in India – and has in recent months backed Akash, Pharmeasy, Bluestone, Firstcry — and overseas alongside another $300 million earmarked in reserve for his existing businesses in healthcare, education, insurance and stem cell research.

In the past, Pai has invested some $100 million in nearly 50 startups through 11-year-old Aarin Capital—run in partnership with the former chief financial officer of IT bell weather Infosys, Mohandas Pai. It backs tech-related businesses across a range of industries, including specialty biopharma firm Vyome Therapeutics and branded economy hotel chain FabHotels. Aarin was the first backer of Byju’s.

India is seeing sustained healthy demand for healthcare services and continued market share gains for organised players on back of increasing insurance coverage, expansion into tier-2 and tier-3 cities, and revival of medical tourism following Covid.

According to ICRA report, private equity investments have also witnessed a healthy ramp-up in the Indian hospital industry, with deals worth over Rs. 27,000 crore in the last two years.

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