KKR close to buying cancer chain HCG
Healthcare Global Enterprises Ltd (HCG), the country’s largest speciality cancer care hospital chain, from another private equity firm CVC Capital Partners, said people aware of the matter.
The development comes less than six months after KKR made a return to the Indian hospital sector, after a gap of two years The private equity firms are aiming to sign binding documents this month, latest early January.
Trumping a rival bid by Bain Capital, KKR entered into an exclusivity pact in late October with CVC for bilateral negotiations to acquire CVC’s 60.36% stake at a price of Rs 425-450 per share. This is at a 10-15% discount to the Rs 509.85 of Tuesday closing price, which translates into a market value of Rs 7,106.63 crore. But the stock has surged 43% in the last six months on the back of a strong financial performance and expectations of a sale. In the past month alone, HCG shares have risen 14%.
HCG’s founding family, led by renowned oncologist BS Ajaikumar, owns 10.87% of the company. Founded in Bengaluru in 2005, HCG held its IPO in 2016. It’s present in 19 Indian cities and has 2,200 beds.
With the promoters — CVC and the founding family — owning a 71.23% stake, KKR is expected to launch an open offer for another 26% of the firm after the acquisition. Initially Ajaikumar may not sell, but if the new promoter group led by KKR crosses the 75% threshold, then the founding family may pare its stake leaving the US buyout group as the sole promoter. The transaction may involve an eventual delisting of HCG in case
