Private equity giant KKR is in advanced stages of acquiring Healthcare Global Enterprises Ltd. (HCG), India’s largest specialty cancer care hospital chain, from CVC Capital Partners. The deal, expected to be finalized by January 2024, could reshape the cancer care landscape in India by accelerating HCG’s expansion.
Founded in 2005 in Bengaluru, HCG operates in 19 cities with a network of 2,200 beds. The company has experienced robust growth, outpacing the cancer care industry’s 17% compound annual growth rate (CAGR). HCG’s recent acquisitions, including the Visakhapatnam-based Mahatma Gandhi Cancer Hospital & Research Institute, have reinforced its commitment to strategic expansion, with plans to add 900 new beds over the next 4-5 years.
KKR’s acquisition could lead to significant changes in HCG’s leadership structure. While founder and renowned oncologist Dr. B.S. Ajaikumar may step back from an executive role , he has expressed a desire to remain chairman. The deal, estimated at Rs 425-450 per share, values CVC’s 60.36% stake at Rs 4,663.12 crore. KKR is expected to launch an open offer for an additional 26% stake, potentially leading to the company’s delisting if shareholding crosses 90%.
HCG’s focus on cutting-edge technology, such as advanced radiation therapy equipment and an aggressive digital strategy, has widened its patient base. Digital channel revenue, which was 4% of total revenue a year ago, now accounts for 14%. This growth is aligned with HCG’s aim to enhance accessibility and operational efficiency.
Once the acquisition is finalized, KKR plans to inject capital into the chain to fuel its non-metro expansion and create a reserve for further acquisitions. Analysts predict a significant valuation rerating, with HCG trading at one of the lowest multiples in the healthcare industry.
As reported by the Economic Times, this acquisition underscores KKR’s return to India’s hospital sector and its commitment to the healthcare space, following its recent acquisition of a majority stake in Kerala-based Baby Memorial Hospital.