Temasek may bid for CVC’s 60% stake in Healthcare Global

Singapore’s Temasek Holdings may bid for CVC Capital Partners’ controlling stake in listed hospital chain Healthcare Global Enterprises Ltd, two people familiar with the development said. Other potential investors already in the race for CVC’s 60.4% stake include TPG, Bain Capital and VPS Healthcare (now Burjeel Holdings).

“Temasek will either bid alone or partner with one of the other private equity funds,” said one of the two people. He said potential investors have submitted preliminary bids and are now conducting due diligence.

Shares of HCG on Thursday closed 1.98% lower at ₹358.80 per share on the NSE, while the Nifty index closed at 22,648.20 points. Its total market capitalization stood at ₹4,997.71 crore.

CVC Capital Partners, which bought about 59% stake in Healthcare Global for ₹1,100 crore in 2020, later increased its stake to over 60.4%. At the current share price and market capitalization, the stake is worth more than ₹3,004 crore.

When contacted Dr. B.S. Healthcare Global founder Ajay Kumar said he has no plans to sell his nearly 11% stake or increase his stake. Kumar declined to comment on the deal and referred all questions to CVC Capital Partners.

“I am not selling my stake. As far as I am concerned, I am the founder, a doctor, interested in oncology and I plan to stay in HCG,” said Kumar, 71.

Kumar’s daughter Anjali Ajaykumar Rossi is executive director-strategy at HCG. Kumar also clarified that he is not planning to increase his stake in the firm, dismissing rumors that he may partner with another private equity firm to help increase his stake. “There is no such consideration at present,” he said.

Email queries sent to TPG and VPS spokespersons remained unanswered. Temasek and Bain Capital declined to comment.

Founded in 1989, HCG primarily operates in oncology, with 23 cancer care centers and four multi-specialty hospitals as of December 31, 2023. The company has its presence in cities like Ahmedabad, Chennai, Nashik, Ranchi, Rajkot, Cuttack, Hubli, Mumbai, Nagpur, Vizag and Vijayawada. It is present across the oncology value chain, providing services ranging from prevention, screening, diagnosis and treatment to rehabilitation, supportive care and palliative care.

The company reported operating income of ₹1,417.5 crore for the nine months ending December 31, 2023. “Going forward, the company’s revenue growth is expected to remain healthy due to the rising incidence of cancer in addition to HCG’s established position in the oncology segment. Additionally, the company is expected to see improvement in profitability margins supported by improvement in operating leverage, reduction in losses and turnaround of its emerging centers and continued improvement in payer mix,” ICRA’s March 28 ratings report said.