M&A: Max Healthcare acquires Sahara Hospital, Lucknow at an Enterprise Value of Rs 940 Crores.
Transaction:
- Max Health said it was acquiring a 100% stake in 550 Bedded Sahara Hospital at an enterprise value of Rs 940 Crore, representing an enterprise value/sales multiple of 4.7 times.
- Crosslay Remedies Limited, a wholly owned subsidiary of Max Healthcare Institute Limited, entered into a Share Purchase Agreement to purchase of 100% stake in Starlit Medical Centre Private Limited through Business Transfer Agreement with Sahara Hospital. Starlit had entered into a Business Transfer Agreement with Sahara India Medical Institute Ltd for purchase of Healthcare Undertaking consisting of Sahara Hospital, Lucknow, on slump sale basis.
About Max Healthcare Institute Limited:
- Max Healthcare Institute Limited (MHIL) is one of India’s largest hospital chain operators. MHIL is concentrated in North India consisting of a network of 17 healthcare facilities, out of which eight hospitals and four centers are located in Delhi.
- Max Healthcare also operates home care and pathology business under the brands Max@Home and Max@Labs.
- The present amalgamated company was formed subsequent to the acquisition of 49.7% stake in erstwhile Max Healthcare Institute Limited by Radiant Life Care Pvt. Ltd. and the amalgamation of Max Healthcare with Radiant thereafter. The amalgamated entity assumed the name Max Healthcare Institute limited. Prior to the amalgamation, Radiant was led and promoted by Abhay Soi.
About Sahara Hospital:
- Sahara Hospital is a tertiary care NABL and NABH accredited hospital, providing integrated healthcare services with availability of all super specialties and diagnostics facilities under one roof.
- Current operational bed capacity is 250 beds. The hospital is situated on a land parcel of 27 acres at Gomti Nagar, Lucknow and has a built-up area of 82,673 sq.mt. Spread across 17 floors.
- Sahara Hospital also has a nursing college on the same premise with annua intake of 100+ students.
- Hospital currently serves 2 lakh patients every year and has a renowned centre of excellence for Neurosciences. FY24 Revenue run rate of Hospital is around INR 200 Cr.
Rationale:
- Hospital has a potential to quickly ramp up beds in existing building and expand medical programs like Oncology, Transplants, Robotics, etc.
- This acquisition marks Max Healthcare’s entry into Lucknow, one of the fastest growing cities of Uttar Pradesh. Lucknow caters to demand from cities like Kanpur, Allahabad, Varansi from Uttrapradesh and also parts of Bihar. Max’s entry in Lucknow is following successful entry of Apollo and Medanta Hospital in Lucknow market.
- Max Healthcare will bring high end medical programmes such as Oncology, Organ Transplants and also strengthen the existing programmes like Orthopedics, Cardiac Sciences, Neurosciences, Renal Sciences, etc.
- Abhay Soi, chairman and MD of Max, said that the acquisition was in line with Max’s strategy to enter new Tier I / II cities which have developed healthcare service ecosystem. He expected to quickly improve operating and financial performance of Sahara Hospitals based on Max’s track record of successful post-merger integration.
- In the September quarter, Max’s average revenue per occupied bed (ARPOB) improved by 13% to 74,600 as against Rs. 66,000 in the same period last year.
- Max’s revenue in FY23 was around Rs. 4560 Crore, up from Rs. 3950 Crore in FY22, with robust operating margin of 27% in FY23 as against 24% in FY22. Company is one of the best valued Hospital chain with stock currently valued at EV/Ebitda multiple of over 45.
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
Disclaimer:
This material has been prepared by the personnel in Vora Corporate Finance which is Investment Banking arm of Vora Management Consultancy Private Limited and looks after Mergers & Acquisitions (M&A), Private Equity (PE), Fund Raising, Debt syndication and Valuations and is based out of Ahmedabad, Gujarat, India. Any views or opinions expressed herein are solely that of individual authors and may differ from view of Vora Management Consultancy Private Limited. This material is proprietary to Vora Management Consultancy Private Limited and is for your personal use only. Any distribution, copy, reprints or forward to others is strictly prohibited.
This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction