CVC seeks control of India healthcare player HCG
CVC Capital Partners is looking to acquire majority control of Indian cancer care center operator HealthCare Global Enterprises (HCG) in a deal that could be worth up to IN10.4 billion ($$138.9 million).
Last month, HCG highlighted a CVC offer to buy a 36.4% stake. The company announced on June 4 that the promoters had accepted a revised bid of INR6.5 billion ($86 million) for 29.16%.
CVC has now made an open offer to acquire 26% of the company held by public shareholders for INR130 per share. These shareholders include founder and CEO B.S. Ajai Kumar, Temasek Holdings, the International Finance Corporation, and Indgrowth Capital. If accepted, CVC would obtain majority control and could seek to delist the healthcare chain.
Founded in 1989, HCG owns and manages a network of 23 oncology treatment centers nationwide. It also manages four hospitals, three diagnostic centers, a single day care chemotherapy center, and nine fertility centers. Other assets include a minority stake in Strand Lifesciences, a provider of bioinformatics solutions, and operations in four African countries.
The company has grown over the years with the help of private equity investment. Temasek Holdings invested in the company in 2013. Two years later, HCG raised INR6.5 billion through a domestic IPO priced at INR205-218 per share. The stock closed at INR119.75.4 on June 4, the day CVC's latest offer was announced.
According to its latest quarterly report released before a two-month nationwide shutdown order due to COVID-19, revenue increased 14.8% year-on-year to INR8.2 billion for the nine months ended December 2019. However, the company posted a lower net loss of INR1.83 million compared to INR7.3 million registered for the same period a year earlier. Over the past financial year, HCG has opened two new cancer care centers and one fertility center in the country.
CVC, which closed its fifth Asia fund at the hard cap of $4.5 billion in April, pursues control and partnership investments in core consumer and services sectors. In India, the GP acquired a majority stake two years back in legal process outsourcing business UnitedLex. The company is based in the US with significant operations in India.
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