Deal focus: Abraaj builds on India healthcare foundation

When Dubai-based Abraaj Group bought Advent International's controlling stake in CARE Hospitals, it was a deal that had been a long time coming.

"I remember going there almost two years ago and saying to the doctors, ‘We would love to work with you,'" remembers Khawar Mann, managing director and head of healthcare at Abraaj. "Advent then started an auction process, but we knew the business well before that process started."

Abraaj has taken over CARE, India's fifth-largest hospital chain, with an eye to bringing its healthcare-delivery models to additional underserved populations. In addition to the company's current focus of India, the private equity firm plans to initiate expansion into its other markets, particularly emerging markets such as Africa.

For Advent, which has held its majority stake in CARE since 2012, having reportedly paid $105 million for a 72% stake, the sale marks the conclusion of a busy and active relationship. "One of our ideas was to expand and broaden the whole management structure, which is what the founders also wanted," says Shweta Jalan, managing director at Advent. "So we worked very closely with Dr. Soma Raju, who was the main founding partner of the company, to bring in a new CEO."

Along with hiring the former head of southern India at Fortis Healthcare to run the company, Advent also focused on building out the rest of the management team and filling vacant spots at other spots on the corporate ladder. These moves came in addition to the GP's investments in new facilities and in renovating existing ones.

When the time came to sell, Advent sought the input of the founders once more, giving them the opportunity to meet with the most likely buyers and share their judgement. The GP felt that this would give the team a chance to get comfortable with their new partners.

Having bought Advent's stake - the deal size has not been announced, but sources familiar with the situation indicated a valuation of INR18 billion ($266 million) - Abraaj hopes to build on the work that Advent has done, while adding more lines to the company's operations, particularly in its new territories.

"As you develop those assets in those countries, what do you need? You need great doctors, you need great managers, and you need great auxiliary health workers," says Abraaj's Mann. "So together with the CARE team, we hope to put in place training programs: management training, doctor training, auxiliary health worker training."

As CARE moves into new regions, however, the new owners have placed a priority on keeping the same high standards that made the company so attractive in the first place. If it can keep delivering the same quality of health outcomes that it is known for, it will continue to build its value and deliver good returns, no matter who controls it.

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• Topics
• Buyouts
• Trade sale
• Healthcare
• South Asia
• India
• healthcare
• buyout
• Exit
• Trade sale
• Advent International
• The Abraaj Group