Emerging markets private equity major Actis said it is selling its majority shareholding in Sterling Addlife India Ltd, a healthcare provider in Gujarat, for an undisclosed sum. Actis' 82 per cent stake in the multi-specialty hospitals chain, which operates as Sterling Hospitals, was acquired by promoter Girish Patel.
While the deal size or exit multiple could not be ascertained, Actis had invested $46 million in the healthcare chain to increase its stake to 82 per cent. In 2006, it initially invested $15.5 million to acquire 41 per cent. The rest is already held by Patel.
For Actis, the exit comes over two years after Sterling was put on black first in mid-2011. While JM Financial was initially given the mandate, later it was given to Kotak Mahindra Capital Company.
Sterling attracted interest from investors like India Value Fund and Malaysian sovereign wealth fund Khazanah, besides Fortis Healthcare and Apollo Hospitals. According to The Times of India, HealthCare Global (HCG) had made a bid of Rs 500 crore, but backed out later.
Actis helped put a professional management team and expanded the footprint from a single site to seven across the state, besides expanding specialist surgery like liver and bone marrow transplants.
Patel, who is currently chairman of Sterling, will acquire the stake through Addlife Investments. The deal would mean a significant bet by Patel, who was also the promoter Paras
Pharmaceuticals, on the healthcare space.
Patel expects to expand Sterling beyond Gujarat, where it has multi-specialty hospitals in four cities and secondary hospitals in two cities. “Actis has helped Sterling professionalise, accelerate growth and create a pan-Gujarat healthcare platform. I intend to build on this foundation and turn Sterling into a leading healthcare player on a national scale," Patel said.
"Sterling Addlife reported a compounded annual growth rate (CAGR) of over 22 per cent in the operating income during the previous three years ending FY13, aided by continuous addition of number of operational beds. It grew at around 17 per cent in FY13 over FY12 on the back of income growth from new hospitals which are in stabilisation phase," said a CARE Ratings report on the company.
Sterling Addlife had total operating income of Rs 274.23 crore with profit after tax of Rs 6.08 crore in FY13.
Sterling was initially promoted by Paras Pharma, but the stake in the hospital was later bought by Actis and Girish Patel personally.
Sterling was the initial entry point for Actis into Paras, as the PE firm first backed the hospital chain and then invested in the FMCG company. Investment in Paras was a multi-bagger for Actis, making one of the best private equity exits in the country.
While his brothers Davendra and Darshan sold their stakes to PE firms Actis and Sequoia by 2008, Girish held on to his stake in Paras.
Girish Patel is said to have made Rs 900 crore when he exited Paras along with Actis in 2010, when the company was acquired by British multinational Reckitt Benckiser for Rs 3,200 crore. After the exit, he has set up a low-cost housing venture and is also the key investor in private equity firm Access Capital.
His brother Darshan Patel has promoted another FMCG company, Vini Cosmetics, which was valued at nearly Rs 1,000 crore by Sequoia Capital earlier this year.
(Edited by Joby Puthuparampil Johnson)