M&A: Blackstone acquires controlling stake in CARE Hospitals and KIMS Hospitals

M&A: Blackstone acquires controlling stake in CARE Hospitals and KIMS Hospitals

Transaction:

• US-based private equity major Blackstone said on Monday it had completed the acquisition of a 72.5 per cent stake in Quality Care India Ltd (QCIL), which operates a network of Care Hospitals, from Evercare, a platform backed by TPG Rise funds.
• In a separate deal, QCIL has signed a definitive agreement to acquire around 80% in KimsHealth, a Thiruvananthapuram-headquartered quaternary care hospital network offering end-to-end healthcare services.
• Blackstone’s overall commitment including its investment in QCIL and KIMS is estimated to be around $1 Billion as reported by various media outlets.

About Blackstone:

• Blackstone is an American alternative investment management company based in New York. It was founded in 1985 as a M&A firm by Peter G. Peterson and Stephen A. Schwarzman, who had previously worked together at Lehman Brothers.
• As of June 2023, the company’s total assets under management were approximately US$1 trillion, making it the largest alternative investment firm globally.

About Care Hospitals:

• Founded in 1997 by a team of India’s leading cardiologists, CARE Hospitals started its journey as a 100-bedded Heart Institute with a core team of 20 cardiologists, 1 operating theatre, and 1 catheterization laboratory.
• Today, the CARE Hospitals Group is a multi-specialty healthcare provider with 17 healthcare facilities serving 7 cities across 6 states in India.
• It is the regional leader in South and Central India and is amongst the top 5 Pan-Indian hospital chains. CARE Hospitals delivers comprehensive care in over 30 specialties.

About KIMS:

• Founded in 2000, by Dr. Bhaskar Rao Bollineni in the city of Nellore. KIMS is one of the largest corporate healthcare groups in India.
• KIMS operates 13 hospitals across the states of Andhra Pradesh, Telangana, and Maharashtra.

Rationale:

• TPG will continue to hold the remaining stake of 27.5% in QCIL. With QCIL valued at Rs 6,600 Crore ($800 million), the deal is estimated at about Rs 4,800 Crore ($580 million). The valuation of KimsHealth is estimated at Rs 3,300 Crore ($400 million).
• The acquisition of Care Hospitals by Blackstone and, in turn, of KimsHealth by Care Hospitals would create one of India’s largest hospital platforms spread over 11 cities, with 23 facilities. Combined entity would be comparable in size to Aster DM and Fortis Healthcare and bested only by Apollo Hospitals and Manipal Hospitals.
• KimsHealth posted revenues of Rs 968 Crore in FY23, growing at 16% year-on-year, while its EBITDA stood at Rs 187 Crore, up 26%. Profit after tax in FY23 was Rs 142 Crore.
• True North will sell its entire stake in KimsHealth as part of the transaction, while Dr. Sahadulla, Chairman and MD of KIMS will continue to hold around 20% and continue to run the business.
• The combined platform will deliver care in more than 30 clinical specialties, including cardiac sciences, oncology, neurosciences, renal sciences, orthopedics, gastroenterology, and integrated organ transplant.