Khazanah’s Parkway tipped to buy Sterling Hospitals from Actis
Parkway Holdings, the Singapore-based hospital operator owned by Khazanah Nasional, is the favored bidder for Actis’ Sterling Hospitals. The deal, which could be worth around INR7 billion ($142 million), would allow Parkway to enter India’s $65 billion healthcare sector.
The principal rival bidder, South India-based Manipal Health Enterprises, confirmed to The Economic Times that Sterling had eliminated it from the running. In addition to Manipal and Parkway, AMRI Hospital, Fortis Healthcare and DM Healthcare, a Dubai operator backed by The Carlyle Group, are among those that have been involved across several rounds of bidding.
AMRI made it to the final shortlist with Manipal and Parkway, but pulled out in September when the asking price climbed above INR6.4 billion. It had already increased its bid by INR500 million to INR6 billion.
Actis bought a 41% stake in Sterling in 2006 while simultaneously purchasing 23% of Paras Pharma, a producer of over-the-counter medicinal products. The private equity firm accumulated a 63% holding in Paras Pharma and exited its last December to Reckitt Benckiser for INR32.6 billion, securing a 10x return in its original investment.
Actis now possesses more than 80% of Sterling, and Girish Patel, former owner of Paras Pharma, holds 12%, with the remainder controlled by small investors. Sterling runs six hospitals in the western state of Gujarat, including a 175-bed specialty Sterling Hospital in Ahmedabad, as well as two satellite centers in the area, and the 100-bed Sterling Unity Hospital in Baroda.
In June, the private equity firm was reportedly in early-stage talks with strategic buyers Fortis, Apollo Hospital and Parkway, as well as private equity firms including Advent International, Carlyle and Apax Partners.
Malaysian sovereign wealth fund Khazanah bought Parkway in July 2010 for $2.56 billion, overcoming Fortis, which is already Asia Pacific's largest hospital management firm. Earlier this year, it paid INR4.7 billion for a minority stake in India's Apollo Hospitals.
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