Abraaj in $250m Indian hospital deal

The Abraaj Group (Abraaj) has agreed to acquire a majority stake in Quality CARE India (CARE), a multi-specialty healthcare provider in India, from US-based buyout firm Advent International (Advent).   

Details of the transaction were not disclosed but local press reports place the value of Advent’s 72 percent stake in the business at around INR17 billion (€231 million; $253 million). 

The firm is expected to make a return of about 2.5x on its investment. It originally bought its controlling stake in 2012 for $105 million and was said to be seeking to sell it for INR18 billion.

First-round bidders reportedly included a consortium formed of Hinduja Hospital and Everstone Capital, a team comprising South African hospital chain Netcare and Bain Capital Advisors, and a tie-up between Baring Private Equity Asia and Malaysia’s IHH Healthcare.

Headquartered in the city of Hyderabad, CARE is the fifth-largest healthcare provider in India, operating 2,600 beds across 16 hospitals in nine cities. 

The Dubai-based fund manager and CARE will focus on expanding the business’ integrated healthcare delivery system, especially in the underpenetrated regions of India. There were nine hospital beds per 10,000 people in the country in 2012, much less than the World Health Organisation standard of 30 per 10,000. 

The partnership will also bring CARE’s services to other markets where Abraaj operates, the statement said.
Sev Vettivetpillai, partner and global head of Abraaj’s thematic funds business, reckons that “the implications of the healthcare gap in India are profound, but they translate into a long-term opportunity for Abraaj to help build a better and more sustainable healthcare infrastructure in the country.”

The firm is looking to acquire further businesses that are complementary to CARE. It will also consider a stock market listing for CARE over the next few years, thought this is not thought to be a priority. 

The deal marks Abraaj’s 28th investment in the healthcare sector across growth markets. It has deployed nearly $1 billion globally in 27 healthcare service investments so far. 

The acquisition is also the biggest transaction in India’s healthcare sector as well as the largest foreign direct investment for a controlled transaction by a Gulf-based entity into India, according to the local press. 

The remaining stake is held by doctors at CARE. The transaction, subject to closing conditions, is expected to conclude in the first quarter of 2016.