HealthCare Global Enterprises Ltd (HCG), the oncology-focussed hospital chain controlled by private equity firm CVC Capital, has increased its stake in a southern India hospital to gain majority control.
HCG bought an additional 60.9% of Suchirayu Health Care Solutions Ltd in Hubli, Karnataka, for Rs 33 crore ($4.4 million) to increase its stake to 78.6% from 17.7%.
Suchirayu owns a multi-speciality hospital with an operational capacity of 110 beds and a potential to scale up to 250 beds. HCG has operated the hospital since August 2017 and had the right to increase its stake up to 80% in July 2022.
HCG also owns and operates a standalone cancer centre at Hubli. It said that the acquisition will create synergetic benefits and market leadership in the region.
“M&A has been a core part of our strategy, and we have demonstrated our capability to integrate acquisitions,” said HCG executive chairman Dr. BS Ajaikumar. “We continue to explore opportunities in the regional cancer leaders’ space to further consolidate our dominant position.”
HCG CEO Raj Gore said that during the time the oncology chain operated Suchirayu, the target’s revenue more than doubled and its EBITDA margin increased to over 20% from single digits.
Suchirayu was set up in 2011 and clocked revenue of Rs 55.37 crore for the financial year ended on March 31, 2021.
HCG was founded in 1998 and focuses on cancer treatment. It also offers fertility services under the brand Milann. HCG listed on stock exchanges in 2016. Prior to its initial public offering it had roped in a string of private equity firms to back it over the years.
In May last year, CVC Capital agreed to buy 36% of the company through fresh shares at Rs 100 apiece and made a mandatory open offer to buy an additional 26% from the public shareholders.
The PE firm bought a tad more than 29% stake through fresh shares. In August 2020, it raised the open offer price to Rs 130 per share and purchased a 20.77% stake from public shareholders. This took its total stake in the company to just below 50%. Earlier this year, CVC Capital bought additional shares of HCG to increase its stake to 53.67%.
Shares of HCG have nearly doubled since its acquisition by CVC. The shares were trading around Rs 258 apiece on Monday.