Manipal Health Enterprises, Emami Group break logjam on AMRI Hospitals

Manipal Health Enterprises and Emami Group have begun fresh talks for the sale of the latter’s hospital business, AMRI Hospitals, after the previous round of talks entered into a logjam, with Manipal Health moving Delhi High Court (HC).

A source close to the development said that fresh discussions have begun between the two parties and a revised bid is also being considered.

“The matter is sub judice in Delhi HC, and now both Manipal Health and Emami want to quickly go for a settlement,” said a source, declining to share the revised bid price.

“There are pending legal issues. Approval from the state government is also in abeyance. Therefore, discussions are ongoing on several matters,” said a source.

The Ranjan Pai-led Manipal Health had moved Delhi HC in November 2022, seeking to bar Emami Group from selling a majority stake in AMRI Hospitals to a third party or alter the management after a deal between the two parties fell through. Owing to differences over the terms and conditions of the deal and pending clearances from the state government of West Bengal, the deal between Manipal Health and Emami had not fructified. 

The West Bengal government has a 1.9 per cent minority stake in AMRI Hospitals.

Reportedly, Max Healthcare had entered the fray for AMRI Hospitals, offering a better bid than Manipal Health’s Rs 1,800-crore offer for AMRI. 

According to reports, Max’s counter offer was around Rs 2,700 crore. Sources claim that Manipal Health’s revised offer is better than its earlier Rs 1,800 crore.

When contacted, a spokesperson for Max Healthcare did not wish to comment on fresh talks between Manipal Health and Emami.

Manipal Health and Emami Group also declined to comment until the time of going to press. 

Manipal Health has been expanding its footprint. The second largest hospital chain in the country, after Apollo Hospitals, it had acquired the Columbia Asia hospital chain in November 2020 for Rs 2,100 crore, taking its bed strength to 7,300 across 27 locations. In June 2021, it bought Vikram Hospitals in Bengaluru from Multiples Private Equity (PE) for Rs 350 crore.

The network is now estimated to have 8,700 beds across 28 locations. 

With AMRI, Manipal will have a wider presence in the East. Currently, AMRI operates four hospitals, of which three are in Kolkata and one in Bhubaneswar, with a capacity of around 1,100 beds, which can be expanded to 1,200.

Bhavesh A Shah, managing director-consumer and health care banking at Equirus, pointed out that the hospital sector is seeing consolidation.

“Hospitals need a lot of intensity in focus — both operational and financial. The Manipal-AMRI deal is a classic case of the exit of non-core businesses to consolidators in the business. For Emami Group, this transaction will help equitise the financials. For Manipal Group, it will help scale up and have strategic locational benefits,” said Shah.

Manipal Health has been considering an initial public offering (IPO) for some time now for funding its expansion plans and also giving an exit to existing investors. The privately held entity is backed by investors and PE players like Temasek Holdings, TPG Capital, and the National Investment and Infrastructure Fund (NIIF), apart from the Pai family.

The Pais holds around 52 per cent of Manipal Health. Talks have been doing rounds that PE player KKR is looking to acquire stake from Temasek, TPG, NIIF, as well as the Pais. Last October, Manipal Health was valued at Rs 35,000 crore.

According to reports that came in December 2022, existing Manipal Health shareholder Temasek-owned Sheares Healthcare India Holdings had emerged as the new front runner to pick up a significant stake in Manipal Health, valuing the hospital chain at Rs 42,000 crore or so.

Sources had then told Business Standard that the Pais were yet to decide if they wanted to offload stake to another PE investor or go for an IPO.

Both options remain open. But it all boils down to the valuation one can fetch.