TPG-Manipal enter into Exclusive talks to Acquire Medanta- Report

Mumbai: After losing out on the Fortis deal, the Manipal Group backed by TPG is making moves toward acquiring Gurugram Based Medanta Medicity by entering into exclusive negotiations with founder Dr Naresh Trehan and other investors

Medical Dialogues team had earlier reported that that last year TPG-Manipal began to buy a majority stake in the Gurugram-based super-speciality hospital Medanta-The Medicity.

The Manipal Hospital backed up by its investors TPG Capital and Temasek heading closer to acquire Medanta Hospitals had set at a valuation of Rs 5800-6000 crore

Medanta, founded in 2009, operates super speciality hospitals and clinics across cities including Gurgaon, Lucknow, Indore, Ranchi and Sri Ganganagar. Founded by renowned cardiac surgeon Dr Naresh Trehan, Trehan and his family, along with co-founder Sunil Sachdeva own 55% of the share. US-based private equity fund Carlyle Group owns 27% in Medanta, while Singapore's Temasek Holdings Pte holds a share of 18%.

In 2013, Carlyle had acquired a 27% stake in Global Health Pvt. Ltd, which owns, manages and operates Medanta, while Temasek bought its 18% stake in Global Health in 2015 from Punj Lloyd Ltd.

Also Read: Manipal Hospitals closes in to acquire Medanta stake at enterprise valuation 6000 crore

Livemint now reports that private equity firm TPG Capital and Manipal Group have together entered into exclusive negotiation with founder Dr Naresh Trehan and other investors to buy a controlling stake in hospital operator Medanta. With this Medanta will be unable to join hands with any other buyer for a period of three months.

Presently the prospective buyers are reported to be conducting a legal binding process evaluating the company's assets.

Confirmation to the same was given to live mint by two people aware of the development, requesting anonymity.

"The TPG-Manipal combine is in advanced stages of negotiations and they recently entered into exclusive talks. They are currently conducting due diligence on the asset. They have a three-month exclusivity period, so Medanta will not be talking to any other buyer during this period," the first person cited above told the daily.

However, neither Medanta nor TPG Capital commented on the sales processes.

According to earlier media reports, TPG had been actively looking to build up Asia Healthcare Holdings—its healthcare platform and Medanta's acquisition would help the private equity firm diversify its healthcare investments.TPG Capital has sharpened its focus on healthcare investments in India since 2016.

In 2018, TPG was in a race to acquire the country's second largest healthcare provider, Fortis Healthcare. The deal was finally settled by IHH Healthcare, which offered to invest Rs 4,000 crore in the hospital chain.TPG's healthcare portfolio in India includes Cancer Treatment Services International, Bengaluru-based Rhea Healthcare Pvt. Ltd, an operator of hospitals for women and children under 'Motherhood' brand; and Sai Life Sciences, drug discovery and manufacturing firm.

Also Read: Fortis Acquisition boils down to TPG verus IHH

According to recent media reports, Medanta has been under pressure because of price controls imposed by National Pharmaceutical Pricing Authority (NPPA).

In August 2017, the drug pricing regulator capped the prices of knee implants, reducing product prices by as much as 70% and had brought cardiac stents under price control in February to make them affordable. The price of drug-eluting stents drastically went down to about Rs 30,000 from over Rs 2 lakh, which evidently hit the revenues of all the hospitals in the country.

Similarly, Medanta also saw a cry off in its revenue after several of its top doctors quit to join rivals such as Fortis and Max Healthcare Ltd.