When Fortis Healthcare—India’s second largest hospital chain—was put on the block in early 2018, it seemed for a moment that Ranjan Pai’s Manipal Health Enterprises Private Limited (MHEPL) had clinched the deal. But, as it turned out, after several twists and turns, in a months-long bidding war for control of Fortis, Pai eventually lost the race to Malaysia-based IHH Healthcare.

Acquiring Fortis would have catapulted Manipal Hospitals—an established hospital chain in the south—into the position of the biggest player in the healthcare space in India, ahead of Chennai-based Apollo Hospitals. But that didn’t stop Pai from pursuing his pan-India ambition. In the past Manipal Health was in talks with Gurugram-based hospital chain Medanta and Kolkata-based AMRI Hospitals. But the deals didn't work out. And eventually Pai’s persistence paid off.

Earlier this week, Bengaluru-based Manipal Hospitals announced that it has entered into a definitive agreement to acquire Columbia Asia Hospitals in India. The ₹2,100 crore deal was funded through a combination of equity and debt. Columbia Asia currently operates 11 hospitals with over 1,300 beds across the country. The combined entity will now have a presence of 27 hospitals across 15 cities with more than 7,300 beds and a total workforce of 10,000 people including over 4,000 doctors. In an interview with Fortune India, Pai, chairman, Manipal Education and Medical Group (MEMG), spoke about the deal and how the synergies between the hospitals would work out. Edited excerpts:

What was the rationale behind the Columbia Asia deal? Was geographic expansion the key criteria?

Well we have been looking for good acquisitions for the last several years. Mergers and acquisition (M&A) is always tough to close, and tougher to make it work after you acquire an asset. Geographic expansion always helps as it opens up new markets for us. But good assets with the right fit are hard to come by, so when a good asset like this comes along, we were keen to close it out.

How do you see the synergies panning out between the two hospital chains?

Whenever two hospital chains come together there are bound to be synergies. Columbia Asia is a well run asset with very good talent pool of doctors, nurses, paramedical staff, and management. We believe there could be good career opportunities for them as we continue to grow in these markets. We expect synergies in procurement of consumables and pharmacy. Also doctor teams in both the systems could have opportunities in more hospitals.

Do you see an overlap in the density of hospitals especially in your home market Bengaluru?

Bengaluru is a big city with a lot of good quality hospital beds. This acquisition will increase our presence but we don’t think there is any overlap. We will be able to better serve our patients across the city and state.

Has the pandemic impacted the hospital business in the last seven months? How are you dealing with it?

The pandemic has impacted almost all facets of life and healthcare is no different. The lockdown was hard initially but we are slowly seeing volumes coming back and we believe the long term prospects of healthcare in India is very positive. The pandemic has also forced us to speed up our digital initiatives in healthcare and we are excited to explore how we can better serve our customers and communities using digital and physical touch points seamlessly.

How was the deal structured? When do you expect the deal to clear all regulatory approvals?

The deal was done through MHEPL [which runs Manipal Hospitals] and both TPG [Capital] and Temasek has been part of this deal. [TPG and Temasek are investors in Pai’s MHEPL.] All regulatory approvals should take around 60 days.

Are you exploring opportunities outside India?

Well we believe that there is a lot of opportunities for us in the Indian market and we will now focus only on India growth opportunities and strategies.

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