Will healthcare billionaire Ranjan Pai break the jinx of buying a hospital chain in India? Pai, chairman of the Manipal Education and Medical Group (MEMG), is said to be in a one-horse race for the buyout of Columbia Asia Hospitals, a deal that is being pegged at about Rs 2,000 crore. The hospital chain is owned by Seattle-based healthcare provider Columbia Pacific Management.
Pai’s Manipal Health Enterprises Pvt Ltd (MHEPL) runs Bengaluru-based Manipal Hospitals, which operates over 5,000 hospital beds. MHEPL has been trying to build a larger pan-India presence by taking the acquisition route, but has been unable to crack a deal thus far.
“I think this time it may pass through as there are not many suitors for this asset; It’s almost like a one-horse race for Manipal now,” a source privy to the developments told Fortune India. “It also helps that [private equity major] TPG [along with Malaysia-based conglomerate Hong Leong Group] bought the Southeast Asia assets of Columbia Asia [in 2019].” In India, TPG Capital owns about 22% stake in Pai’s MHEPL (Temasek, Singapore's sovereign fund, is the other investor), and has been backing the hospital chain since 2015.
In 2017, Pai sewed up a mega deal with TPG to buy Fortis Healthcare, which would have pitted him directly against market leader Apollo Hospitals that is led by Dr Prathap C. Reddy. Eventually, the deal fell through and Fortis was bought by Malaysia’s IHH Healthcare. Pai’s efforts to buy various other hospitals in the country, including Medanta - The Medicity, also fell through.
“In any transaction everything becomes more intense when you start doing legal and shareholder documentation. With Manipal, when it comes to the final stages, re things fall off the radar,” said the source cited earlier. Pai, who is an astute investor himself, is known to it play safe. “It’s absolutely right for him to be very safe. Because it [Manipal Hospitals] is a big asset that he holds and the scale that he is trying to put together requires intense capital,” said a person who knows how Pai operates.
While Pai declined to comment, an email response from Nate McLemore, managing director, Columbia Pacific Management, Inc. read: “ We can confirm that we have retained Morgan Stanley and are running a process to sell the Columbia Asia India business, but we do not have any further comment at this time about the process.”
At present, Columbia Asia operates over 1,000 hospital beds in India, with five hospitals operating in Bengaluru alone. It also operates hospitals in Ghaziabad, Gurugram, Kolkata, Mysore, Patiala, and Pune. On the other hand, Manipal Hospitals operates four hospitals in Bengaluru and one each in Delhi, Goa, Jaipur, Salem, Vijayawada, and Malaysia.
Industry watchers, though, caution that a potential deal between Manipal Hospitals and Columbia Asia would create a massive overlap in the density of hospitals in Bengaluru. That said, the buyout would give Pai a pan-India play. “But obviously it’s no comparison to the assets of Fortis Hospitals and what that could have done for Manipal Hospitals,” said an industry observer.