PE firm Abraaj to buy Advent’s majority stake in CARE Hospitals

Dubai-based private equity investor Abraaj Group said on Wednesday it has agreed to acquire a majority stake in Hyderabad-based multi-speciality hospital chain CARE Hospitals from PE firm Advent International.

Abraaj didn’t disclose financial details of the transaction but people privy to the development told VCCircle the deal was struck at an enterprise value of about Rs 1,800 crore ($270 million) for Quality Care India Ltd, which runs CARE Hospitals.

Abraaj is buying a 72 per cent stake from Advent for about Rs 1,300 crore ($195 million) and is also picking up part of the stake of the hospital chain’s founders, the people said. This would make it the biggest deal in the healthcare delivery segment in India to date.

The deal marks a relatively quick exit for Advent. It had acquired a controlling stake in the chain in 2012 for Rs 610 crore (about $105 million) from a bunch of investors including stock market investor Rakesh Jhunjhunwala, Matrix Labs founder Nimmagadda Prasad and UK-based Ashmore. It had also invested some of the money into the firm through a fresh subscription to shares.

Advent hired investment bank Moelis & Co and Capital Fortunes in April 2015 to help it exit CARE Hospitals.

Advent had acquired a controlling stake in the chain in 2012 for $105 million

The announcement ends more than a year of speculation on who would buy the stake. Temasek, Everstone, Baring PE Asia, Bain Capital and South Africa's Netcare were also in the race to buy the stake in CARE Hospitals.

Abraaj Group, which has deployed nearly $1 billion in 27 investments across the healthcare sector in emerging markets, said it would take CARE Hospitals to other markets it operates in.

“The implications of the healthcare gap in India are profound, but they translate into a long-term opportunity for Abraaj to help build a better and more sustainable healthcare infrastructure in the country," said Sev Vettivetpillai, partner and global head of Abraaj’s Thematic Funds Business.

Founded in 1997 by B Soma Raju and a group of professionals, CARE Hospitals has strengths in cardiac care, neurology, nephrology and general medicine. It has 2,600 beds across 16 hospitals in nine cities, making it the fifth-largest hospital chain in the country. Apollo Hospitals, Fortis and Narayana Hrudayalaya are among the other prominent hospital chains in the country.

The transaction is subject to customary closing conditions and is likely to conclude in the first quarter of 2016.