Capital needed for private healthcare in India, PE money critical: Manipal's Ranjan Pai on Temasek deal

Singaporean sovereign wealth fund Temasek acquiring a majority stake in Manipal Health Enterprises at a valuation of north of Rs 40,000 crore-Rs 42,000 crore is being considered as one of the biggest business deals in Indian healthcare space. Dr Ranjan Pai, promoter and chairman of Manipal Health Enterprises, who now owns a 30% stake in the company compared to previously 52% spoke about the deal in an exclusive interview with Business Today. Pai spoke about the future of the Manipal Hospitals after the acquisition, its growth plans and increasing interest of private equity (PE) firms in Indian healthcare. Edited excerpts from an interview:

The Temasek- Manipal is one of the biggest deals in the Indian healthcare space? What does it mean to you?

We are glad for Temasek’s acquisition of a significant stake in Manipal Health Enterprises and its continued support to the management team in ensuring that the platform reaches its full potential. I am glad that we have a partner like Temasek who share our values of clinical excellence, patient centricity and ethical practices and will be a part of the journey ahead.

Temasek, which previously held an 18 per cent stake in Manipal Health, purchased 41 per cent shares from your company totalling to a 59% stake in the hospital chain. Your equity has been diluted after this deal, how will it impact functioning with only 30% stake with you?

There will be no change in the management structure, and we will be as involved as we were before. We will continue to invest in the platform each time funding requirements come up. Although Temasek has a larger stake, it will be a consensus-run company.

What are your growth drivers? And what are your future plans after this deal?

Our board has already approved the growth plan for the next five years, which will see us launch two greenfield hospitals in Bengaluru and one in Raipur, thus adding another 1,100 beds in the next 18-36 months. Additionally, Manipal Health Enterprises is expecting to add another 2,500 beds over the next three years through the inorganic route. We want to ensure that the company continues to see uninterrupted growth and deliver clinical excellence. We would like to hold a significant minority and if the company needs more funds in future, we will be open to investing.

Manipal has been acquisitive in the past few years. Will this inorganic growth continue? What is your focus and way forward?

Currently, we don’t have any specific location in mind for expansion. However, we will consider an acquisition if we feel that it will help us serve people better.

Why do you see there is a rise in PE investments in Indian healthcare space?

A lot of capital is needed in private healthcare in India, which comes in the form of either investments or from large conglomerates or from private equity funds. Thus, private equity money is critical for fuelling faster growth of the industry.

Watch: Reliance, Adani among 49 bidders to show interest in Big Bazaar owner Future Retail

Watch: IPL 2023 Points Table: Contenders for Orange, Purple caps, Shikhar Dhawan, Virat Kohli, Mark Wood, Rashid Khan and others