ICICI Venture, India’s largest private equity fund, is on an exit spree from its healthcare and life science investments. ICICI Venture is likely to exit from I-Ven Medicare India Pvt. Ltd, a special funding vehicle aimed at investing in hospitals, also part of India Advantage Fund Series 2.

According to sources, India Value Fund Advisors (IVFA) Pvt. Ltd, the Mumbai-based private equity investment firm with more than $1.4 billion under management, is in talks with ICICI Venture to acquire a majority stake in I Ven Medicare. It is learnt that IVFA may rope in DM Healthcare Pvt. Ltd. (DMH), its Kochi-based portfolio company promoted by Azad Moopen, a Dubai-based doctor turned entrepreneur, for acquiring the I Ven Medicare stake. In 2008, IVFA had invested $50.4 million (Rs 200 crore) in DM Healthcare Pvt Ltd for a large minority stake.

It is believed that Veda Corporate Advisory Services is advising this transaction. Mails sent to Vishal Nevatia, Managing Partner, IVFA and an ICICI Bank spokesperson declined to comment. DM Healthcare and Veda could not be reached for immediate comments.

At least two separate sources directly familiar with the development said, discussions were at an advanced stage but the firms concerned were still at work for a definite deal. ICICI Venture will retain part stake and be part of a larger M&A involving IVFA and DM.                    

Valuation details of IVEN Medicare, which has between 750 and 1,000 beds, were not available at the time of publication of this article. Recently, DM promoter Azad Moopen had said, his firm was looking at fresh fund-raising with the option of existing investors hiking stake. 

In 2008, DMH acquired majority stake holding in 80-bed Aadhar Hospital, Kolhapur. In 2009, its 35-bed Al Rafah Hospital, Muscat was commissioned while 60-bed Aster Hospital, Sohar was commissioned last month. In 2010, DM Healthcare acquired 40 acres in Kochi to set up DM MedCity. Backed by IVFA, DM Healthcare has been on the prowl for acquisitions, and has been in protracted discussions to acquire Bangalore's Mallya Hospital, which has hit a deadlock currently.

The idea behind I-Ven Medicare was to create beds under management of I-Ven Medicare, which will be the holding company. Its investments include Vikram Hospitals Pvt Ltd ($24 million), Medica Synergie Pvt Ltd ($16.5 million), Sahyadri Hospitals ($36 million) and RG Stone Urological Research Institute ($10 million). Currently I-Ven Medicare has 750-1,000 beds under management. 

In an interview with VCCircle last year, Vishakha Mulye, Managing Director & CEO of ICICI Venture, had said, "I-Ven Medicare will drive common branding and practices, and try to bring economies of scale such as a large organised hospital chain will do. The idea is to make this an interesting proposition for a strategic sale, or an IPO for our exit."

Last month, VCCircle had first reported ICICI Venture's plan to sell I-Ven Pharma Capital Limited, a Special Purpose Vehicle, to Dr Reddy's Labs (DRL), its exclusive partner in the SPV. ICICI Venture has invested Rs 100 crore and holds 100% stake in I-Ven Pharma, created in 2005 for the purpose of funding research, development and commercialization of pharma products by DRL for the US market. ICICI Venture had exited from Perlecan Pharma, which was formed in 2005 as a JV between Citigroup Venture, DRL and ICICI Venture for funding R&D activities.

Recently, ICICI Venture exited from diagnostic chain Metropolis Healthcare in a secondary transaction with Warburg Pincus. ICICI Venture had invested Rs 35 crore in Metropolis from its India Advantage Fund Series-1 in 2006 and held around 20-25% stake in the firm. Business Standard had reported ICICI Venture’s plan to exit Ranbaxy Fine Chemicals, which was part of Ranbaxy Laboratories. Media reports also suggest that ICICI Venture is likely to offload part of its stake in Arch Pharmalabs through the latter’s IPO expected later this year.

ICICI Venture has made significant investments in the lifescience and healthcare space. Recently, it announced an investment of Rs 120 crore ($27 million) in Star Health and Allied Insurance Company Limited from its latest fund. Its other portfolio companies include Radiant Research Inc., Onconova Therapeutics Inc., Arch Pharmalabs, RFCL, Bharat Biotech, Swiss Biosciences AG. It exited from its investments in Intas Pharma, Malladi Drugs, Biocon, Avesthagen and Medicorp Technologies.

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