Billionaire entrepreneur Ranjan Pai’s Manipal Health Enterprises Pvt Ltd (MHEPL), along with private equity firm TPG Capital, was among the front-runners to acquire Gurugram-based Fortis Healthcare. But the bidding war to acquire Fortis ended on May 10 with the Fortis board eventually deciding in favour of a combined entity led by Sunil Kant Munjal (Hero Enterprise) and the Burman family (Dabur Group). In an interview with Fortune India, Pai, CEO and MD of Manipal Education and Medical Group (MEMG), spoke about the deal, the disappointment, and learnings from the experience. Edited excerpts:
Why was Fortis Healthcare so important to you?
For me, it was a perfect fit in terms of asset matching. They (Fortis) had good assets and we had complementary footprints across the country. It was a good fit from that perspective. Very rarely in India do you come across assets which don't have a large promoter holding. However, it was a difficult and complex deal as it had multiple angles to it. We liked the asset because it was a large well-built asset, but there was a lot of work to be done, and we were confident that given our track record in the healthcare space, this challenge was worth taking up from a long-term perspective.
Were you disappointed with the outcome of the deal?
I was disappointed that evening when I came to know that we hadn't bagged the deal. But I was fine the next day. I got up with a clear mind. I would have loved to get the deal done. I really wanted it to happen because I felt that we were the best suitor for it. Given our track record, experience and the amount of work we have done on the deal, I think we would have been in the best position for it. Maybe five years later when I look back, either I will say, ‘Thank God, I didn’t do it’, or ‘I wish I did it’.
To chase a deal for so long isn’t an easy task. Was it mentally exhausting for you?
It was an exhausting process. We invested a lot of time in this deal. But, I think, there were a lot of learnings as well. If I had to take something positive out of this whole affair, I feel I imbibed valuable lessons in learning how to react to situations. I also made a few good friends on this journey. Going ahead, I will definitely be wiser in my dealings.
Given the chance what would you have done differently?
Given that this is the first time I have dealt with a publicly listed company, I think I should have looked at the deal from a minority (shareholder) perspective and not just from my perspective or my investors. I should have put myself in their shoes and structured the deal. I think that was a big learning. I will definitely keep a lot more cognisance of this fact in my future deals.
Are you open to more deals in the market now?
More deals like this, no. We are always open to exploring options if it makes sense for our business. These (such as Fortis) deals don’t come very often. It is a unique asset in that sense in the healthcare space. We are open to more deals, but that doesn’t mean we are looking out aggressively. It all depends on what comes our way. I am very clear that any M&A has to come at the right price for me and my shareholders. We will not be irrational in this. You have to be very careful in what you are chasing. If anything goes wrong it can pull down whatever you have built so far. I want to make sure that I preserve it and not ruin it. I want to be sound in what I do.
What are the plans for Manipal Health Enterprises now?
We continue to grow organically. I think we are in a good spot currently. We have got supportive investors to back us. If inorganic opportunities do come, we will look at it. It has to be something that we as a company are comfortable considering and pursuing.
Update: On May 14, private equity firm TPG Capital backed Manipal Health Enterprises made a revised offer for the third time to acquire Fortis Healthcare. In a filing to the stock exchanges, Manipal-TPG combine has proposed to buy shares of Fortis Healthcare at Rs 180 a share on a preferential basis, up from Rs 160 a piece in its earlier offer. The revised proposal, which values Fortis at Rs 9,403 crore, is valid till May 29.