Singapore-based private-equity giant Temasek Holdings has gained control of Manipal Health Enterprises in India through  what is being billed as the largest deal in the Indian healthcare sector.

Temasek, which already had 18 per cent stake in Manipal Health, bought an additional 41 per cent stake from the promoters and other investors, including TPG, a US-based private-equity firm, and the National Investment and Infrastructure Fund (NIIF), at an enterprise valuation of Rs 40,000 crore. With this, the Temasek stake has risen to 59 per cent. 

Temasek is reportedly spending Rs. 16,000 crore cheque to buy out the additional stakes from the existing shareholders. Post-transaction, TPG's stake would fall considerably from the existing  21 per cent stake. The Pai family would now hold about 30 per cent stake. 

Temasek has stayed invested in Manipal for the past six years and plans to remain a long-term investor. Backed by private-equity players, Manipal Health has been expanding its footprint and has emerged as the largest hospital chain in the country after Apollo Hospitals. The network is estimated to have 8,700 beds across 28 locations.

In April 2021, Manipal Health had acquired the Columbia Asia Hospital chain for Rs 2,100 crore, taking its bed strength to 7,300 across 27 locations. In June 2021, it bought Vikram Hospitals in Bengaluru from Multiples Private Equity for Rs 350 crore.

Manipal Health Enterprises had set in motion the process to  acquire Emami Group’s stake in AMRI Hospitals at a valuation of Rs 2,350 crore. AMRI operates four hospitals, of which three are in Kolkata and one in Bhubaneswar, with a capacity of around 1,100 beds, which can be ramped up to 1,200.

The Temasek-Manipal Health deal is the latest in the series of mergers and acquisitions that have been happening in the Indian healthcare sector in recent times. 

In August last year, private-equity firm KKR had sold its 27 per cent stake in Max Healthcare for Rs 9,200 crore via block deals to a number of shareholders. In 2018, Malaysia’s IHH acquired 31 per cent in Fortis Hospitals by infusing Rs 4,000 crore into the company.

According to CRISIL, the Indian healthcare sector had recorded a 11 per cent increase in earnings during FY23. This trend is expected to continue in FY24 as well. During FY22, private hospitals in India had reported an all-time high profitability rate of 19 per cent.