Private equity giant KKR is set to acquire a 51% controlling stake in Bengaluru-based cancer care hospital chain Healthcare Global Enterprises (HCG) from CVC Capital Partners.As per the media reports, the deal is valued at ₹3,128 crore, with KKR offering ₹430-440 per share, representing a 14-16% discount compared to Thursday’s closing price of ₹511.45 on the BSE.
Following this acquisition, KKR will initiate an open offer for an additional 26% stake at an estimated ₹490 per share, as per the Securities and Exchange Board of India’s guidelines. If the open offer is fully subscribed, KKR’s total stake in HCG will rise to 77%, taking the total deal value to approximately ₹4,900 crore.
This acquisition marks KKR’s continued investment in India’s healthcare sector, following its earlier exit from Max Healthcare and its acquisition of Baby Memorial Hospital last year. The deal is expected to be finalized soon, with definitive agreements likely to be signed in the coming days. The HCG board is set to meet this week to discuss quarterly earnings, during which the transaction is expected to be reviewed.
HCG, which has been operational since 2005, runs 21 specialized cancer treatment centers and three multispecialty hospitals across India, along with an international cancer care center in Kenya.
The company faced financial strain during the COVID-19 pandemic due to debt-backed expansion but has since recovered through strategic growth initiatives.
In late 2023, HCG expanded its network by acquiring MG Hospital in Vizag, which has 196 operational beds and a 35% profit margin. The company also launched a 200-bed cancer care center in Ahmedabad and is expanding its North Bangalore facility with 125 additional beds. Over the next four to five years, HCG aims to add 900 more beds across its network, positioning itself for future growth. Analysts predict the company’s profit after tax will surpass ₹200 crore by 2026-27, up from ₹41 crore in 2023-24.
As part of the deal, HCG’s founder, Dr. B.S. Ajaikumar, will retain a 10.87% stake but transition from his role as Executive Chairman to a non-executive position, focusing on research and development. CVC Capital Partners, which currently holds a 60.36% stake, will reduce its ownership to 9%.
CVC initially acquired a majority stake in HCG in June 2020 for around ₹1,049 crore, purchasing new shares and convertible warrants, followed by additional acquisitions through a mandatory open offer. The ongoing transaction with KKR follows months of negotiations, including discussions with other private equity firms such as Bain Capital.
Goldman Sachs, JP Morgan, Allegro, and Ambit are serving as financial advisors for the deal. Given HCG’s improving financial performance and expansion plans, industry experts anticipate a positive market re-rating post-acquisition. The company’s stock has already gained 44% in the past six months in anticipation of the sale.
Source of Information: https://health.economictimes.indiatimes.com/news/hospitals/kkr-set-to-buy-cancer-chain-hcg/118248704?utm_source=top_story&utm_medium=latestNews
