KKR to Acquire Majority Stake in HCG from CVC Capital Partners

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Global investment firm KKR is set to acquire a controlling 51% stake in Bengaluru-based cancer care hospital chain Healthcare Global Enterprises (HCG) from private equity firm CVC Capital Partners, according to sources. This move underscores KKR’s growing focus on India’s expanding healthcare sector, which has witnessed significant private equity-led consolidation in recent years.

Deal Details and Valuation

KKR plans to acquire the 51% stake at INR 430-440 per share. This price reflects a 14-16% discount to HCG’s last recorded market price of INR 511.45 per share on the Bombay Stock Exchange (BSE). This transaction is valued at approximately INR 3,128 crore.

Following this purchase, KKR will initiate a mandatory open offer for an additional 26% stake at an expected price of INR 490 per share, in accordance with SEBI regulations. If successful, KKR’s total ownership in HCG will rise to 77%, bringing the overall transaction value to an estimated INR 4,900 crore.

The definitive agreements are expected to be signed in the coming days, possibly by this weekend, as reported by ET.

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Ownership Structure Post-Transaction

Despite the change in control, HCG’s founding family, led by Dr. BS Ajaikumar, will retain a 10.87% stake in the company. However, Dr. Ajaikumar will transition from his role as Executive Chairman to a non-executive position, where he will focus on research and development initiatives.

CVC Capital Partners, currently holding 60.36% of HCG, will reduce its stake to 9% after the transaction. CVC initially acquired its majority share in June 2020, investing approximately INR 1,049 crore through a combination of new shares and convertible warrants. It later increased its stake through a mandatory open offer.

KKR’s Renewed Focus on Healthcare

This acquisition signals KKR’s strategic push into India’s healthcare sector. Previously, the firm exited Max Healthcare in one of its most profitable deals in India. However, in 2024, KKR re-entered the market by acquiring Baby Memorial Hospital, demonstrating its commitment to specialty hospitals and healthcare services.

India’s cancer care industry is growing at a compound annual growth rate (CAGR) of 17%, with HCG expanding even faster due to its aggressive growth strategy. KKR and CVC Capital Partners began bilateral negotiations in October 2024, drawing interest from several global private equity firms, including Bain Capital. However, KKR ultimately secured the deal after months of discussions.

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Leading investment banks Goldman Sachs, JP Morgan, Allegro, and Ambit are advising on the transaction.

HCG’s Expansion and Growth Strategy

Founded in 2005, HCG operates 21 comprehensive cancer centers, three multispecialty hospitals across India, and an international facility in Kenya.

The company faced financial difficulties during the COVID-19 pandemic due to debt-financed expansion and disruptions in cancer care services. However, it has since improved operational efficiency and pursued strategic growth initiatives.

In late 2024, HCG acquired MG Hospital in Vizag, a 196-bed facility with a strong 35% operating margin. Additionally, the company launched a 200-bed cancer care center in Ahmedabad. It is also expanding its North Bengaluru facility by 125 beds.

HCG has plans to expand its capacity by adding 900 more beds over the next four to five years. This move aims to meet the rising demand for specialized cancer care.