Max Healthcare Institute Ltd has approached the Bombay High Court against Care Hospitals and its private equity backer TPG in an attempt to protect its rights under a term sheet it signed with them last month to buy the rival hospital chain.
Mumbai-listed Max, which was previously backed by PE giant KKR & Co. and currently counts Singapore sovereign wealth fund GIC as an investor, said in a disclosure that it has filed a petition against Touch Healthcare Pvt. Ltd, Quality Care India Ltd and Evercare Group Management Ltd in the high court.
Quality Care is the company that runs Care Hospitals. Touch Healthcare and Evercare are part of TPG.
Max said it filed the petition under the Arbitration and Conciliation Act, 1996 seeking interim measures to protect the contractual rights available to the company before it starts arbitration proceedings against Care Hospitals and TPG.
The contractual rights arise from the binding obligations of Care Hospitals and TPG as per the term sheet that Max signed with Evercare on March 16, 2023, the healthcare company said.
Max didn’t give any details of the petition and the term sheet. The company as well as Care Hospitals and TPG didn’t respond to separate requests for comment till the time of filing this article.
However, a person close to the development said on the condition of anonymity that Max and TPG had entered into an exclusivity agreement for negotiations in March, after disagreements with other potential suitors over Care’s valuation and international presence.
The Economic Times, which first reported the development, said the lawsuit comes after TPG ignored Max’s bid and favoured PE giant Blackstone’s improved offer for Care Hospitals. Blackstone’s offer was about 15-20% higher, the report said, citing people with knowledge of the matter it didn’t identify. Max's offer included an option on the Bangladesh assets, where Care Hospitals would be valued between Rs 5,500 and Rs 6,500 crore, the ET report said.
Max, which has a strong presence in north India, has been looking to increase its pan-India presence through Care Hospitals, which has a strong South Indian footprint.
In November, Mint reported that KKR and Singapore state investment firm Temasek, as well as Max Healthcare, were competing to acquire Care Hospitals in a potential deal valued at more than $1 billion (about Rs 8,200 crore). Blackstone and CVC Capital Partners were also shortlisted, Mint reported at the time.
Care Hospitals was founded in 1997 by cardiologists Dr. B. Soma Raju and Dr. N. Krishna Reddy and their associates in Hyderabad, and the company runs 17 centers across six states. In 2012, PE firm Advent International acquired a majority stake in the hospital chain. Advent exited four years later by selling its stake to the UAE-based buyout firm Abraaj. TPG gained control of Care when it took over Abraaj’s healthcare fund after the UAE firm collapsed three years ago.