KKR Strengthens Presence in India’s Healthcare Sector
Global investment firm KKR has acquired a controlling 54% stake in Healthcare Global (HCG), a leading cancer care hospital chain, from CVC Capital Partners for Rs 3,466 crore ($400 million). The deal reinforces KKR’s commitment to India’s healthcare sector, which has seen significant private equity-led consolidation. The acquisition price of Rs 445 per share represents an 11% discount to HCG’s last closing price.
Open Offer to Increase Stake to 77%
Following the initial purchase, KKR will launch an open offer to acquire an additional 26% from public shareholders. If fully subscribed, KKR’s total ownership in HCG will rise to 77%. CVC Capital Partners, which currently holds a 60.36% stake, will retain a reduced shareholding of 7-9% after the deal closes.
KKR Becomes the Largest Shareholder
Funds managed by KKR will assume sole control of HCG’s operations, making KKR the largest shareholder in the company. Akshay Tanna, Head of India Private Equity at KKR, emphasized the firm’s focus on strengthening medical infrastructure and expanding access to oncology services across India.
Dr. BS Ajaikumar to Assume New Role
As reported by economictimes, HCG’s founder, Dr. BS Ajaikumar, will transition to the role of Non-Executive Chairman. He will focus on enhancing clinical, academic, and research excellence while continuing to own 10.87% of the company. Dr. Ajaikumar reaffirmed HCG’s commitment to patient well-being and multidisciplinary cancer care.
HCG’s Expansion and Financial Growth
HCG operates 25 medical centers across 19 cities, offering 2,500 beds, nearly 100 operating theaters, and 40 linear accelerator machines (LINACs). The hospital chain has expanded both organically and through acquisitions. In late 2023, it acquired MG Hospital in Vizag, adding 196 operational beds with a 35% profit margin. Additionally, HCG launched a 200-bed cancer care center in Ahmedabad and plans to add 125 beds in North Bangalore. Over the next 4-5 years, the company aims to expand its capacity by 900 beds.
HCG has demonstrated strong financial performance. Its FY24 profit after tax (PAT) stood at Rs 41 crore, with analysts predicting it will surpass Rs 200 crore by FY27. The company’s stock price has risen 30.28% in the last six months, driven by improved financial results and anticipation of the sale.
KKR’s Expanding Healthcare Investments
KKR will make this investment through its Asia Fund IV. Beyond hospitals, the firm has also invested in Healthium, a leading medical devices company; Infinx, a tech-enabled healthcare revenue solutions provider; JB Chemicals, a pharmaceutical company; and Gland Pharma, a generic injectable pharmaceutical company.
CVC Capital’s Exit and Returns
CVC Capital Partners originally acquired a controlling stake in HCG in June 2020 for Rs 1,049 crore at Rs 130 per share. With this sale, CVC will achieve a 3.4x return in rupee terms on its initial investment. Amit Soni, Partner at CVC, highlighted the success of their partnership with Dr. Ajaikumar and HCG’s management in expanding cancer care accessibility in India.
Deal Advisors and Expected Closing Timeline
Goldman Sachs, JP Morgan, Allegro, and Ambit advised on the transaction. The deal is expected to close by Q3 2025, subject to regulatory approvals and customary closing conditions.
India’s Cancer Care Industry on the Rise
The cancer care industry in India is growing at a compound annual growth rate (CAGR) of 17%, and HCG is outperforming the industry’s growth. KKR’s investment is expected to further accelerate HCG’s expansion and enhance oncology services nationwide.