Malaysia’s IHH Healthcare Seeks Majority Stake in Indian Premier Hospital Medanta

Asia’s biggest healthcare group IHH Healthcare Berhad has submitted a bid for a controlling stake in Medanta-The Medicity, according to reports.

Currently, United States-based private equity fund Carlyle Group owns 27 per cent in the Gurugram-based Medanta’s parent company Global Health, while Singapore’s Temasek Holdings Pte holds 18 per cent, and cardiac surgeon Naresh Trehan, his family and Medanta co-founder Sunil Sachdeva own 55 per cent.

According to IHH Healthcare Bhd’s bid, the premier hospital is valued at Rs 5,500-5,700 crore. Temasek may also put in a bid for majority stake, according to sources quoted by LiveMint.com.

Malaysian group IHH Healthcare has reportedly been looking to expand in India by acquiring the Fortis Hospital chain. It may still do so by buying shares from the public and banks. Presently, 80 per cent of Fortis shares are with the public while 20 per cent of promoter shares are held by lenders Yes Bank and Axis Bank Ltd.

The Malaysian group first forayed into the Indian healthcare market in 2015 by buying a 51 per cent stake in Continental Hospitals Ltd in Telangana for Rs 300 crore and a 74 per cent stake in Global Hospitals Pvt. Ltd in Hyderabad for Rs 1,280 crore.

With exits of top-level doctors from Medanta recently, the valuation that Trehan wanted has also gone down. He expected $1-1.2 billion (Rs 6,500-7,500 crore) a year ago but there has been a fall in revenue, according to sources quoted by LiveMint. Another reason for the fall in revenue has been price regulation of cardiac stents and knee caps.

In August, the National Pharmaceutical Pricing Authority (NPPA) reduced prices of knee implants by as much as 70 per cent while earlier in February it significantly reduced the prices of cardiac stents. The price of drug eluting stents were slashed to about Rs 30,000 from around Rs 2 lakh.

Medanta has also stopped its $250-300 million initial public offering plan.

Medanta was recently in a controversy after reports  surfaced that it charged parents of a 7-year-old child that died of dengue Rs 16 lakh in December 2017. A complaint was filed against the hospital for overcharging the family. The family accused the hospital authorities of “murder, forgery, cheating and extortion,” according to the Times of India.