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After selling a significant stake to Singapore-based Temasek, Dr Ranjan Pai, chairman, Manipal Group, says he would not want to dilute his stake below 30 per cent. Speaking to Sohini Das and Dev Chatterjee, Pai confirms that going forward Manipal Health will look for a listing. Edited excerpts.
Why did you choose Temasek over others?
We have always wanted to have a long-term partner in health care. Most private equities have a 4-5 year window. Temasek was looking at a long-term investment in India, and this is what excited us. This isn't like a traditional investment from private equity. We were also looking for an exit for TPG, and that’s how the conversation started. We had some debt in the holding company which we wanted to pare. We thought this could be one way to look at it – we take care of our debt, we have a long-term partner. They have been with us for the past six years; they know the company and they like the management. For an existing investor to up its stake after five years speaks about the strengths of the company. The holding company will become debt-free after this transaction.
TPG is exiting partially, and coming back through another fund. When they heard about the long-term investment from Temasek and since the two share a nice relationship, TPG also decided to partner us for another round. It was good to welcome them back.
What is the next leg of growth for Manipal Health?
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We want to make sure the company continues to grow, have good corporate governance, and provide quality health care. We want to institutionalise it, and all three shareholders are aligned on this. These are not new people who got together, we have known each other; like-minded investors who are in no hurry to exit. IPO will be an event in the long journey. We don’t want to buy back shares to own a majority. We'd like to hold a significant minority, and if down the line the company needs more funds, we will be open to investing. We will at least hold on to our 30 per cent, and if needed, invest more. We would want to see Manipal listed.
Are you looking at investing in other ventures with the money you just made?
We are looking to invest in our existing businesses – education and insurance – and also earmark some for our hospital business. No new ventures planned at this time.
Is the AMRI deal closed and are you open to more acquisitions?
We don’t have any specific geography in mind for expansion; if it’s a high-quality acquisition we will consider it. We are in advanced talks with some players, and can't disclose the names at the moment. The AMRI deal is closed, and we are waiting for some approvals to come in. We believe Indian health care needs more hospital beds. There could be more acquisitions by Manipal going forward.
Will there be any major changes in the Manipal Health board?
Temasek will take Board control and induct more members to have a majority share. However, Sudarshan Ballal will remain the chairman.
You divested your Malaysia hospital a few years back. Any plans for tapping foreign shores now?
We started off from Karnataka, and will continue to invest here. In every market where we are present, we will continue to invest in greenfield, for example, Jaipur and Pune. We will have to work harder. These are exciting times for Indian health care. Looking at the global headwinds, India is in a very good space.
We will continue to consolidate in India. And when we sold the Malaysia hospital it was part of the strategy to exit the other geographies. The market that can take a lot of capital and room for growth is India, and so we want to focus on this market alone.
