The fundraise, which will be a syndicated acquisition financing facility, will be priced after the Ranjan Pai-led group finalises buyback terms.
Discussions are ongoing on the price that will be at a spread over the global benchmark Secured Overnight Financing Rate, said one of the people. “It should be mostly a five-year facility,” he said.
Manipal Hospitals, TPG and the banks did not comment. TPG, which invested $146 million in Manipal in 2015, holds a 21.5% stake.
‘Likely Valuation at Around ₹18,000 Cr’
The proposed transaction is likely to value Manipal Hospitals at around ₹18,000 crore, said a second person. If the deal fructifies, it will yield a near three-fold return for the US PE firm on its seven-year-old investment.
The deal is aimed at providing a partial exit to the Texas-based investment firm, one of the most aggressive investors in the healthcare space in India.
India’s National Investment and Infrastructure Fund and Singaporean sovereign fund Temasek Holdings are the two other external investors in the firm. The promoters hold close to a 60% stake.
With US Treasury yields remaining elevated, offshore bank loans are increasingly gaining ground as they are cheaper than raising funds through bonds.
Globally, sponsor funds or general partners of PE firms take credit facilities to finance buyouts, mainly to lower the cost of capital.
Merger and acquisition funding in India soared three-fold in FY22 to $32.5 billion. Acquirers raised a record $32.2 billion in 2021-22 to fund deals in 321 transactions, shows data from analytics firm Dealogic. A year earlier, this was $10.9 billion.
Footprints & Origins
Besides its minority stake in Manipal Hospitals, TPG Growth has a majority stake in Asia Healthcare Holdings, which runs India’s largest mother & child care hospital chain, Motherhood Hospitals, and infertility chain Nova IVF. In India, TPG Growth also owns Hyderabad-based CARE Hospitals, which has a network of 15 healthcare facilities with over 2,400 beds.
In November 2020, Manipal Hospitals acquired the Indian assets of Columbia Asia Hospitals for around ₹2,100 crore and in June 2021, purchased Bengaluru-based Vikram Hospitals from Multiples private equity firm for around ₹350 crore.
The Pai family, which founded India’s first privately owned medical college, in the town of Manipal in Karnataka in 1953, set up Manipal Hospitals in 1991 in Bengaluru. Manipal has around 7,800 beds spread across the country.
The hospital industry will require investments of around $245 billion over the next 20 years, according to a recent PwC report. India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years, it said.