Carlyle-backed diagnostics firm Metropolis acquires Sanjeevani Pathology

By Joseph Rai

  • 04 Feb 2017

Diagnostics chain operator Metropolis Healthcare has acquired Gujarat-based Sanjeevani Pathology Laboratory in an all-cash deal as the private equity-backed firm seeks to strengthen its presence in the western region of the country, a company statement said.

Sanjeevani is Metropolis’ largest laboratory acquisition in India to date, the statement said, without disclosing the financial details of the transaction. Its earlier acquisitions include Amin's Pathology Laboratory Pvt. Ltd and Wellness Laboratories Ltd, according to VCCEdge, the data and research platform of News Corp VCCircle.

The latest acquisition will also give Metropolis a strong foothold in the under-penetrated Saurashtra region, the statement added.

Sanjeevani Pathology, which was founded in 1993, has four labs with a team of six senior pathologists, including founder and promoter Kirit Patel, in Rajkot, Gujarat.

Boutique investment bank Wodehouse Capital Advisors advised Sanjeevani Pathology on the deal.

The acquisition by Metropolis comes at a time when its rival Dr Lal PathLabs Ltd has emerged as the frontrunner to acquire another Gujarat-based firm, VCCircle reported last month. 

Notably, India's diagnostics sector has witnessed high investor activity of late, with Dr Lal PathLabs becoming the first firm from the space to get listed in December 2015.

In 2016, rival Thyrocare Technologies Ltd also floated a blockbuster IPO. SRL Ltd, India's largest diagnostics chain by revenue, is likely to list its shares via a reverse merger. Metropolis is also reportedly looking to float an IPO.

In February last year, Ameera Shah, managing director of Metropolis, had told VCCircle that an IPO was something the company kept discussing but has not decided on.

While Metropolis has been expanding in India, it exited South Africa last year due to lack of growth and regulatory hurdles and restructured its Middle East business.

Metropolis, which started as a single lab in the 1980s, received its first external funding of Rs 35 crore from ICICI Venture in 2005. This was followed by a fresh funding of $85 million from private equity firm Warburg Pincus, giving an exit to ICICI Venture. 

Almost five years down the line, when Warburg Pincus expressed its desire to exit, a similar pattern would have likely followed. However, reports of boardroom struggle between the Shah family and GSK Velu, a serial entrepreneur who had been associated with the company since 1998, spilled over the media.

In a surprise twist, the Shah family bought out Warburg Pincus' 27% stake for Rs 550 crore with the backing of KKR India, increasing the family's stake from 36% to 63%. Eventually, private equity firm Carlyle bought out Velu's stake, leading to his exit from Metropolis.

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