Deal focus: TPG vindicates India healthcare strategy

The acquisition of Cancer Treatment Services International (CTSI) by TPG Growth-owned Asia Healthcare Holdings (AHH) in 2016 was notable – and risky – in that there was no existing senior management team. The business comprised a single hospital in Hyderabad, yet the investment thesis envisaged the formulation of an integrated oncology platform encompassing diagnostics through radiation treatment planning.

“It takes great conviction to step in at an early stage and put together a model that can really scale and grow,” says Vishal Bali, executive chairman of AHH. “The expansion blueprint was put together prior to the investment but build versus buy requires very strong management talent. The business wasn’t run by a large professional team. We hired a new CEO and a complete C-suite.”

There are now 12 single-specialty hospitals under CTSI’s American Oncology Institute brand in India and Sri Lanka, each one a greenfield development. Agreements have been signed to build six more facilities, which will take the business into Nepal, Bangladesh and Myanmar.

The diagnostics function is delivered by pathology and laboratory services provider AmPath, which was originally part of the Hyderabad hospital, but AHH decided to establish as a nationwide standalone business. It now has around 500 B2B clients. There has been one bolt-on acquisition: CTSI bought a company that supplied cancer treatment planning services to the University of Pittsburgh Medical Center (UPMC). The Pittsburgh connection is not random. CTSI was established in 2006 by a team of clinicians from UPMC. 

The result was compelling enough that US-based Varian Medical Systems – having watched CTSI’s growth first-hand as its dedicated technology partner – decided an acquisition of the business was the best way to expand its product offering into cancer care services. It recently agreed to buy CTSI for $283 million. TPG Growth invested much more in the platform than the $33 million it initially paid for a 65% stake in CTSI and Bali declines to give the exit multiple. But he says it is “one of the best outcomes for TPG in healthcare delivery.”

The exit also serves as vindication of AHH itself, which is described as an operating platform rather than a traditional holding entity. Bali, formerly CEO of Fortis Healthcare and founder of home healthcare start-up Medwell Ventures, leads a team of five industry veterans who bring different operational expertise in different areas, from human resources to supply chain management. 

When the platform was established three years ago, the healthcare opportunity in India was clear. The issues were rising valuations for mature assets and difficulties in execution.

“We always thought that, with single specialty healthcare businesses, if we gave them the right capitalization and management, we could put them on a profitable trajectory,” Bali adds.   

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• Topics
• South Asia
• Trade sale
• Healthcare
• India
• TPG Capital
• Exit