Temasek Eying Controlling Stake in Cancer Care Hospital HCG: Report

As of March 31, 2024, Promoters hold 71.28% shareholding in Healthcare Global Enterprises Ltd (HCG) including 60.41% stake controlling stake held by CVC Capital Partners.

Global PE giant Temasek Holdings is eyeing a controlling stake in oncology hospital Healthcare Global Enterprises (HCG).

Reportedly, the Singapore-based fund is considering a bid for CVC Capital Partners' controlling stake in the listed hospital chain.

With other major players including TPG, Bain Capital, and VPS Healthcare also in contention, the race for HCG's majority ownership is heating up.

Per a Mint report, quoting sources, Temasek may either bid independently or collaborate with other private equity firms to acquire CVC's 60.4% stake in HCG.

Initial bids have been submitted, and due diligence is underway, the report added.

However, HCG founder, Dr BS Ajai Kumar dismissed the reports stating that he has no plans to sell or increase his stake. He also dismissed the rumors of a potential partnership to boost his shareholding.

Financial Snapshot

Established in 1989, Bengaluru-based HCG specializes in oncology and operates 23 cancer care centers and four multi-specialty hospitals across India.

As of Friday, HCG shares stand at INR 358.50 on the NSE, with a total market capitalization of around 4990 Cr.

As of March 31, 2024, promoters hold 71.28% shareholding in HCG. This includes a controlling stake held by CVC Capital Partners, a Luxembourg-based company that owns around 60.41% stake.

The founder of the hospital chain Dr BS Ajai Kumar and his family own about 11% of the company. His daughter Anjali Ajaikumar Rossi is the executive director of strategy at HCG.

In 2020, CVC Capital Partners acquired 59% of HCG for INR 1,100 Cr. However, it later increased the stake in the healthcare provider.

As of May 2020, TPG, which is also in the race for a controlling stake, held a 9.4% stake in HCG.

Temasek’s Bet on Indian Healthcare

Post-COVID-19 pandemic, the demand for private medical services has seen a significant rise in India owing to the rising middle class and an aging population.

As a result, the healthcare sector is witnessing a massive consolidation and heightened deal activity which has piqued the interest of global PE giants.

Temasek, a Singapore state-led investment firm, has been making strategic bets in the sector. It has a portfolio of investments in India's healthcare sector, including stakes in Medanta and Manipal Health Enterprises.

In January 2015, Temasek invested around seven billion rupees to acquire almost 18% of the private hospital chain through Dunearn Investments. Temasek's stake has been diluted over the years, but it remains at around 17%.

In April 2023, Temasek acquired an additional 41% stake in Manipal Health Enterprises for around $2 billion, taking its total stake to 59%. In February 2024, Temasek sold an 8% stake in Manipal Health Enterprises to Mubadala Investment Company.

Last month, it sold an 87% stake in Kolkata-based Medica Synergie to its other holding company Manipal Hospitals for an estimated INR 1,200 Cr. The deal was part of Manipal Hospitals' strategy to expand its presence in Eastern India.

In a bid to boost its healthcare investment in the country, Sheares Holdings, a wholly owned subsidiary of Temasek, has also set up shop in India.