MUMBAI: American private equity fund KKR will buy 51% of HealthCare Global Enterprises, a Bengaluru-based listed company, from fellow private equity player CVC for Rs 3,203 crore, marking its second investment in India’s hospital sector after Baby Memorial Hospital. In 2022, KKR had exited its investment in Max Healthcare Institute.
As a result of the stake-purchase deal, KKR will make an open offer to HGE’s public shareholders for an additional 26% at Rs 445 per share in accordance with India’s takeover rules.
If KKR fails to achieve 54% ownership through the open offer, it will buy an extra 3% from CVC, according to the investment agreement. The deal values HGE at Rs 6,203 crore, below its market capitalisation of Rs 7,000 crore based on Friday’s closing price of Rs 500 per share.
Based on the open offer results and investment conditions, KKR’s final equity stake in HGE is anticipated to range between 54% and 77%.
HGE’s promoters are Aceso, affiliated with EuroNext Amsterdam-listed CVC Capital Partners (60.35%), and doctor B S Ajaikumar and family (10.87%).
In a regulatory filing, HGE said existing promoters will cease to be in control of the company and KKR will acquire sole control of it, becoming part of the promoter category.
Ajaikumar, who founded HGE in 1989, and his daughter Anjali Ajaikumar Rossi, will not continue in any executive capacity and will be redesignated as non-executive directors, the company said. Post-deal completion, Ajaikumar will transition to the role of non-executive chairman.
The transaction is expected to be concluded by the third quarter of this year.
HGE, a leading oncology hospital chain in India, operates 25 medical care centres across 19 cities, including 2,500 beds and nearly 100 operating theatres.
KKR’s investment will be channelled through Hector Asia Holdings II and KIA EBT II. The US fund will appoint all non-independent directors on the board of HGE. It will also have the first right to buy Ajaikumar and family’s stake in HGE, when they decide to sell.
The investment agreement includes provisions for HGE employees with vested stock options to convert their holdings into cash. In a regulatory filing, HGE said it will accept up to 16.19 lakh options from employees. While the cash consideration was undisclosed, the stock options are expected to be purchased at Rs 445 per share.
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