Temasek, Warburg, CDPQ eye stake in TPG’s Asia Healthcare


Mumbai: Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), Singapore’s sovereign fund Temasek Holdings Pvt. Ltd and American PE fund Warburg Pincus LLC are in talks to buy a minority stake in Asia Healthcare Holdings, a healthcare platform set up by US-based private equity fund TPG Growth, for $80-100 million, two people aware of the development said.

According to one of the two persons cited above, who spoke on the condition of anonymity, TPG is likely to sell 30-35% stake in Asia Healthcare. The deal, he added, is expected to value Asia Healthcare at $285-300 million (Rs1,800-2,000 crore).

Asia Healthcare holds TPG Growth’s investments in Bengaluru-based Rhea Healthcare Pvt. Ltd, which operates a network of mother and child care centres in India under the Motherhood brand; and Cancer Treatment Services International (CTSI), a network of single-speciality facilities across India.

Asia Healthcare is headed by Vishal Bali, a senior healthcare adviser to TPG Growth in Asia and a former group chief executive at Fortis Healthcare.

Asia Healthcare is in talks to raise as much as $100 million by selling a significant minority stake, and has hired Kotak Investment Bank to handle the transaction, Mint reported last week.

Spokespersons for TPG Growth, CDPQ and Temasek declined to comment. Mails sent to Warburg Pincus went unanswered.

TPG (formerly Texas Pacific Group) with more than $73 billion of assets under management, has made several large investments in the Indian healthcare industry.

TPG Capital, the buyout arm of TPG Group, invested Rs900 crore to acquire about 25% stake in Manipal Health Enterprises Pvt. Ltd, one of India’s largest private hospital groups, in 2015. TPG Growth also owns around 73% in Bengaluru-based surgical equipment maker Sutures India Pvt. Ltd.

If CDPQ wins, it would be the fund’s first healthcare investment in India. CDPQ, the second largest pension fund in Canada with $210 billion (C$270.7 billion) worth of assets under management as on 31 December 2016, has been investing in sectors like power, infrastructure, logistics and financial services in India.

Warburg Pincus and Temasek already have a wide presence in Indian pharmaceuticals and healthcare sector.

Temasek is an investor in Gurugram-based Medanta Medicity, a super-speciality hospital run by cardiac surgeon Naresh Trehan. It also holds a minority stake in Bengaluru-based cancer care hospital chain HealthCare Global Enterprises Ltd (HCG).

A consortium of TPG Capital and Temasek was also interested in acquiring Hyderabad-based chain CARE Hospitals. In addition, Temasek Holdings is one among the private equity firms in discussions to acquire a controlling stake in Kerala Institute of Medical Sciences (KIMS).

Warburg Pincus owns a minority stake in Visakhapatnam-based drug ingredient maker Laurus Labs Ltd.

The healthcare delivery system in India will require an investment of around $245 billion over the next 20 years, according to a recent PwC report. The enormous potential of healthcare sector in India has made the sector an attractive investment destination for large global PE funds.

Besides their stand-alone investments, a few funds are also looking to set up healthcare platforms like TPG.

In July, global investment firm KKR & Co. acquired a 49% stake in hospital chain Radiant Life Care Pvt. Ltd for $200 million, with a plan to acquire more assets through the Radiant platform.

Venture capital and private equity investors’ interest in India’s healthcare sector rose in the past five years, with transaction value increasing from $94 million in 2011 to $1.2 billion in 2016—a jump of over 13.5 times, added the PwC report.

According to the report, India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years.

According to another report by Crisil Research, the Indian healthcare delivery market is expected to expand at a compound annual growth rate, or CAGR, of 12% to reach Rs6.8 trillion by 2019-20.

The size of the Indian healthcare delivery industry in 2014-15 was Rs3.8 trillion, according to a Crisil report.