CVC Capital to acquire 36% stake in cancer chain HCG
CVC’s investment is expected to trigger an open offer for an additional 26% of the company.
By Reghu Balakrishnan, ET Bureau | Updated:
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Mumbai: US based private equity fund CVC Capital has agreed to acquire about 36.48% stake in cancer care chain Healthcare Global Enterprises through a preferential allotment of shares.
ET was the first to report about the potental investment by CVC Capital in HCG on its Thursday edition. The deal will be signed through CVC Capital's Singapore-based investment arm - Aceso Company Pte. Ltd.
Post transaction, stakeholding by promoter BS Ajai Kumar (chairman & CEO) will come down to 13.78% from 19.9% while others in promoter group will hold 2.46% stake. Post transaction, public shareholding will come down from 76.1%, to 47.28% as per latest regulatory disclosures.
About 2.95 crore of equity shares and 2.25 crore of Series A Warrants will be issued to the new investor.
CVC’s investment is expected to trigger an open offer for an additional 26% of the company. On Thursday, HCG shares are traded at Rs.95.4 on BSE.
Other investors in HCG include Temasek Holdings and Indgrowth Capital. Singapore's Temasek holds a 9.4% stake in the widely held company, while Indgrowth Capital owns 1.2%.
Ajai Kumar, an oncologist-turned-healthcare entrepreneur, has been its CEO since 2005.
The decision was taken during a board meeting held on Thursday for considering and approving a proposal for raising capital.
CVC, which manages $83 billion of assets across the world, had made its debut deal in India in 2018 by acquiring enterprise legal services firm UnitedLex BPO.
An aggressive buyout specialist, CVC Capital Partners is a spin-off from Wall Street banking giant Citigroup’s venture capital business. It recently raised $4.5 billion for its fifth Asia Pacific fund, CVC Capital Partners Asia Pacific V LP.
HCG, which set up its cancer centre network in 1989, had 22 comprehensive cancer centres, three multispecialty hospitals and as many diagnostic centres as of December 2019.
In 2013, it entered into the fertility treatment business through acquisition of BACC Healthcare and has eight fertility centres operated under the Milann brand. It also runs bioinformatics, molecular testing and precision diagnostics business under the Strand brand.
“Surgeries, though, are down 40%. Surgeries contribute less than 30% of HCG revenues. New patients are seeing a decline and this will likely impact revenues in 1Q. However, the company expects to see a sharp rebound post lockdown and has capacity to fill incremental demand,” said Piyush Nahar of Jefferies.
HCG raised Rs 650 crore through an initial public offering of shares in March 2016. In 2013, it had raised about Rs 140 crore from Temasek.
ET was the first to report about the potental investment by CVC Capital in HCG on its Thursday edition. The deal will be signed through CVC Capital's Singapore-based investment arm - Aceso Company Pte. Ltd.
Post transaction, stakeholding by promoter BS Ajai Kumar (chairman & CEO) will come down to 13.78% from 19.9% while others in promoter group will hold 2.46% stake. Post transaction, public shareholding will come down from 76.1%, to 47.28% as per latest regulatory disclosures.
About 2.95 crore of equity shares and 2.25 crore of Series A Warrants will be issued to the new investor.
CVC’s investment is expected to trigger an open offer for an additional 26% of the company. On Thursday, HCG shares are traded at Rs.95.4 on BSE.
Other investors in HCG include Temasek Holdings and Indgrowth Capital. Singapore's Temasek holds a 9.4% stake in the widely held company, while Indgrowth Capital owns 1.2%.
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Ajai Kumar, an oncologist-turned-healthcare entrepreneur, has been its CEO since 2005.
The decision was taken during a board meeting held on Thursday for considering and approving a proposal for raising capital.
CVC, which manages $83 billion of assets across the world, had made its debut deal in India in 2018 by acquiring enterprise legal services firm UnitedLex BPO.
An aggressive buyout specialist, CVC Capital Partners is a spin-off from Wall Street banking giant Citigroup’s venture capital business. It recently raised $4.5 billion for its fifth Asia Pacific fund, CVC Capital Partners Asia Pacific V LP.
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HCG, which set up its cancer centre network in 1989, had 22 comprehensive cancer centres, three multispecialty hospitals and as many diagnostic centres as of December 2019.
In 2013, it entered into the fertility treatment business through acquisition of BACC Healthcare and has eight fertility centres operated under the Milann brand. It also runs bioinformatics, molecular testing and precision diagnostics business under the Strand brand.
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At present, the HCG network has 2,063 beds and 300 plus oncologists. In fiscal 2019, the company posted revenue of Rs.978 crore with a loss of Rs 25 crore. In Q3 FY2020, it posted a loss of Rs 29 crore, compared with loss of Rs 6.2 crore a year earlier, on revenue of Rs 278 crore. It had debt of Rs 702 crore as on December 31, 2019.“Surgeries, though, are down 40%. Surgeries contribute less than 30% of HCG revenues. New patients are seeing a decline and this will likely impact revenues in 1Q. However, the company expects to see a sharp rebound post lockdown and has capacity to fill incremental demand,” said Piyush Nahar of Jefferies.
HCG raised Rs 650 crore through an initial public offering of shares in March 2016. In 2013, it had raised about Rs 140 crore from Temasek.
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