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Max to buy 51% stake in BK Modi-controlled Saket City Hospital
Photo Credit: Courtesy: Saket City Hospital

Max Healthcare Institute Ltd, an equal joint venture between Max India Ltd and South Africa-based Life Healthcare, has decided to acquire 51 per cent equity stake in Delhi-based Saket City Hospital Pvt Ltd from Singapore-based BK Modi Group company Smart Health City Pte Ltd, it said on Wednesday.

Financial details of the transaction, however, are not disclosed.

Following the completion of the deal, which is subject to regulatory approvals and other conditions, Saket City Hospital will be re-branded as Max Smart Super Speciality Hospital.

Smart Health City Pte Ltd is a Singapore-based company and is the holding firm for Saket City Hospital, which started operations in 2013.

The hospital, which is located in South Delhi's Saket area, has 230 beds and is expanding to 300 beds. On the other side, Max Healthcare plans to expand this facility by 900 additional beds, expanding the hospital’s capacity to 1,200 beds.

Combined with Max Healthcare's existing flagship facility named Max Super Speciality Hospital - Saket, Max Healthcare will have a footprint of more than 2,000 beds in Saket which would make it one of the largest single-location healthcare facilities in India, it said in the statement.

Max Healthcare is one of the largest corporate hospital chains in the country behind Apollo Hospitals Enterprise Ltd, Fortis Healthcare Ltd and IPO-bound Narayana Hrudayalaya Pvt Ltd, which operates Narayana Health. It is especially a strong player in north India.

“We believe that we will be able to integrate SCH with our hospital network quickly to optimise clinical and service standards, realise cost efficiency and attract more top clinicians to an already respectable talent pool,” said Rajit Mehta, managing director and chief executive, Max Healthcare.

Max Healthcare has 13 facilities in North India, of which 10 facilities are located in Delhi-NCR and the others in Mohali, Bathinda and Dehradun.

It has a base of over 2,500 doctors, 10,000 employees, and over 2.7 million patients from over 80 countries, across its network of 13 hospitals.

Interestingly, BK Modi-led Spice Group has been looking to raise capital for its hospitals business to expand through brownfield expansion, as well as acquisitions. Pervez Ahmed, former lead director and vice-chairman of Saket City Hospital, the first hospital of the group, had told VCCircle that it is looking to raise funding by October 2013.

Ahmed, former chief of Max Healthcare who was forced to resign from the Analjit Singh-controlled company in 2011, had told VCCircle then that the group is looking to raise as much as Rs 2,000 crore, possibly in tranches. The firm did not announce any such fundraising, however.

Ahmed, who founded his own healthcare startup a couple of years ago, had quit the Saket City Hospital last year.

“Max’s reputation as a premier healthcare provider and the expertise of its international JV partner, Life Healthcare, South Africa, will act as a catalyst for Smart Health City’s aspirations of creating a world class healthcare destination,” said BK Modi, founder and chairman of Smart Global Group.

EY (formerly Ernst & Young) acted as the advisor to the transaction.

There have been a slew of deals in the hospitals business this year. Max Healthcare itself acquired  76 per cent in Pushpanjali Crosslay Hospital through a combination of fresh investment and acquisition of shares from existing promoters for an aggregate sum of Rs 287 crore ($48 million) early this year. The 340-bed Pushpanjali Crosslay Hospital is located in Ghaziabad in the outskirts of Delhi and has the capacity to expand up to 540 beds.

Although Saket City Hospital is smaller given its operational bed capacity, it is expected to have fetched a much higher valuation given its prime location in south Delhi.

In August, Malaysia's IHH Healthcare Bhd, Asia's largest hospital operator by stock market value, inked a deal to buy 73.4 per cent stake in Ravindranath GE Medical Associates Pvt Ltd, which runs a super-specialty care and multi-organ transplantation hospital chain under the Global Hospitals brand, for Rs 1,284 crore ($194 million). 

In April, IHH had also acquired 51 per cent equity stake in Hyderabad-based Continental Hospitals Ltd for about Rs 281 crore (approximately $45.4 million). Continental Hospitals has a 750-bed super specialty facility in Hyderabad.

In June, Apollo Hospitals inked a deal to acquire 51 per cent stake in a medium-size hospital in Guwahati run by privately held firm Assam Hospital Ltd (AHL) for up to Rs 57.25 crore ($9 million). AHL currently runs a 220-bed hospital under the brand International Hospital.

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