Mumbai: In January 2016, Dubai-based private equity investor The Abraaj Group outbid US private equity firm TPG Capital Lp to buy CARE Hospitals. Ironically, Abraaj lost the helmsman at CARE Hospitals after six months, and it’s the turn of TPG Capital to hire him.
Dilip Jose, group chief executive officer at CARE Hospitals, India’s fourth largest hospital network, has quit to join TPG Capital as senior adviser (healthcare), two people aware of the development said.
Jose resigned a few backs ago and will join TPG in October, said one of the two persons.
Jose, who has over two decades of experience in healthcare, previously headed the southern operations of Fortis Healthcare as its regional director. Earlier, he has held senior managerial positions in firms engaged in tertiary healthcare delivery and medical education, according to his profile on CARE website.
“At Abraaj, we do not comment on matters relating to personnel at our partner companies,” an Abraaj spokesperson said.
When contacted, Jose refused to comment. A TPG spokesperson also declined to comment.
Abraaj had acquired majority stake in Hyderabad-based Quality CARE India Ltd (which runs CARE Hospitals) from global private equity firm Advent International Corp. Though the deal size was not disclosed, Mint reported on 13 January, citing a person aware of the transaction, that the hospital chain changed hands for around Rs.1,700 crore.
CARE Hospitals operates in cities such as Hyderabad, Secunderabad, Visakhapatanam, Raipur, Pune, Nagpur, Bhubaneswar, Jabalpur and Surat.
Founded in 1997 by Dr B. Soma Raju and a team of cardiologists, it also runs a network of telemedicine hubs in rural Andhra Pradesh and Maharashtra. CARE also has a network of 18 hospitals across the country with more than 3,000 beds, across south and central India.
In 2014, Vishal Bali, former group chief executive officer at Fortis Healthcare, had joined TPG as Asia head for healthcare.
“The exit of Jose was in amicable terms with Abraaj Group and there are no differences between the old management team and new buyer, Abraaj Group,” said the second person cited earlier, ruling out any dispute over leading the hospital chain.
As per Sunit Mehra, managing partner at executive search firm Hunt Partners, “The priority of the PE investors might be different from that of existing promoters, and structurally, PE-backed firms remain different from regular organizations. If the alignment may not be there with the existing leadership, chances are high for the change of the leadership team.”
Jose’s hiring will help TPG expand its healthcare portfolio, said the second person. After losing the bid for CARE Hospitals, TPG Capital recently submitted its bid to acquire Kerala Institute of Medical Sciences (KIMS), a hospital chain present in India and West Asia, for a deal worth $300 million,according to a 2 March Mint report.
TPG is an active investor in the Indian healthcare industry. In 2016 alone, TPG Growth, the $7 billion growth equity investment platform of TPG Capital, made two acquisitions of hospital chains in southern India.
TPG Growth acquired Rhea Healthcare Pvt. Ltd, a company promoted by family members of noted film actor Mammootty for $33 million, Mint reported on 19 July. The Bengaluru-based Rhea Healthcare operates a network of mother and child care centres in India under the “Motherhood” brand.
In April, TPG Growth acquired a majority stake in Cancer Treatment Services International (CTSI), a Hyderbad-based chain focusing on cancer treatment. The deal size was not disclosed.
In February 2015, TPG Capital purchased a significant minority stake in Manipal Health Enterprises Pvt. Ltd for Rs.900 crore, Mint reported on 26 February.
TPG Growth also owns 52% in Bengaluru-based surgical equipment maker Sutures India.
TPG’s expansion in the hospital business comes in the backdrop of low healthcare penetration and a huge demand-supply gap in India.
India has only 1.3 hospital beds per 1,000 people—significantly lower than World Health Organization’s (WHO) guideline of 3.5 beds, according to a January 2015 PricewaterhouseCoopers’s report. India’s bed density is also the lowest among the BRIC (Brazil, Russia, India and China) nations.
The healthcare delivery system in India will need to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years, which requires an investment of around $245 billion, the PwC report stated.