A day after officially confirming that Singapore government-owned investment fund Temasek had picked an additional 41 percent in Manipal Healthcare to become the single largest shareholder with a 59 percent stake, Manipal Education & Medical Group (MEMG) Chairman Dr Ranjan Pai said they are looking to raise $100 million through private equity for its Manipal – Cigna insurance business.
The Manipal Group also runs two other businesses in addition to its hospital chain- education and health insurance. While the company is looking for a PE investor as a partner for its health insurance arm, it is not aiming to bring on any financial partners for the education venture, he added. “Education is run by not-for profit entities. However it would be good to have PE investor in the insurance business.”
Speaking to businessline, Dr Pai also said that the takeover of the Kolkata-based AMRI hospital would be complete in the next 1-2 months as only some minor regulatory issues remain. The cost of acquiring Kolkata’s AMRI Hospitals is believed to be around ₹2,400 crore.
Long-term partner
Explaining why MEMG decided to sell a large part of its stake and become a minority shareholder in the healthcare business, Dr Pai said, “Part of the strategy to sell more equity was to reduce debt and find a proper long-term partner for the next 10-15 years. However, we will not reduce our stake below 30 per cent, and will be as involved in the business as before—the name on the door is still Manipal.”
The remaining 11 per cent stake rests with the alternative asset management firm TPG, through its new Asia fund, TPG Asia VIII. Dr Pai described it as a reshuffle of current shareholders and pointed out that the existing management team will remain intact.
Several employees of Manipal Healthcare also are believed to have become millionaires after Teamsek buy due to Employee Stock Ownership Plans (ESOPs), according to sources in the company. However, Dr Pai did not elaborate on how many employees benefited citing that it is privately held but added “Yes, there will be a partial encashment through the deal.” The hospital chain has been valued at ₹40,000 crore, according to sources.