MUMBAI: American private equity fund KKR will buy 51% of HealthCare Global Enterprises, a Bengaluru-based, listed company, for Rs 3,203 crore, marking its second investment in India’s hospital sector after Baby Memorial Hospital.
As a result, KKR will make an open offer to HGE’s shareholders for an additional 26% stake at Rs 445 per share in accordance with India’s takeover rules.
If KKR is unable to reach 54% through the open offer, it will buy an extra 3% from the promoters of HGE, according to the terms of the investment agreement.
The deal values HGE at Rs 6,203 crore, which is lower than HGE’s market capitalisation of Rs 7,000 crore based on Friday’s closing price of Rs 500 per share. HGE’s promoters are Acesco, a part of EuroNext Amsterdam-listed CVC Capital Partners (60.35%), and doctor B S Ajaikumar and family (10.87%). Ajaikumar, who founded HGE in 1989, will take on the role of non-executive chairman of the company after the conclusion of the deal. The transaction is expected to be concluded by the third quarter of this year.
Depending on outcome of open offer and other investment terms, KKR is expected to hold an equity stake between 54% and 77% in HGE.
One of the country’s largest oncology hospital chains, HGE operates 25 medical care centers across 19 cities including 2,500 beds and nearly 100 operating theaters. KKR will be investing in HGE through Hector Asia Holdings II and KIA EBT II.
Following investment deal, HGE employees with vested stock options, have been given the option to exchange their stock options for cash. This means that instead of keeping the company’s shares, the employees can take a payout. In a regulatory filing, HGE said it will accept up to 16.19 lakh options in total from all employees. Though the cash consideration was not disclosed, it is expected that the stock options will be bought at Rs 445 per share.
