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Ameera Shah, MD & CEO, Metropolis

Metropolis Healthcare exits South Africa, rejigs Middle East business

11 August, 2016

Mumbai-based pathology chain operator Metropolis Healthcare Ltd has exited South Africa due to lack of growth and regulatory hurdles and restructured its Middle East business, managing director Ameera Shah told VCCircle.

The exit from South Africa, where the company entered in 2007, was profitable, Shah said, without sharing any financial details.

She also said that Metropolis plans to invest Rs 150 crore over the next two years for acquisitions in India and overseas.

The DNA newspaper first reported news of Metropolis’ exit from South Africa.

The exit comes barely months after Metropolis had entered Zambia early this year. In Africa, the company also has presence in Kenya, Ghana and Mauritius.

“There are no plans to exit from any other African country as of now,” Shah said.

Africa contributes about 10-12% to the company’s revenue while international operations account for a total of 25% of revenue, Shah told VCCircle early this year. She had also said that the company was not looking at opening labs in other countries on the continent.

Apart from Africa, Metropolis also has presence in the Middle East. Shah said the company has restructured its business there to only have collection centres. It had entered the region in 2006 by setting up shop in the United Arab Emirates, starting in Dubai, then Sharjah, Ras al-Khaimah and Abu Dhabi. The company has been in Sri Lanka for 10 years where it has about 15 labs and over 100 collection centres.

Metropolis’ peers including SRL Ltd, Dr Lal PathLabs Ltd and Thyrocare Technologies Ltd also have international operations. At least two of these companies have previously told VCCircle that their focus was largely on India because of the huge market opportunities here itself. 

India’s diagnostics market is highly fragmented with organised players accounting for only 15%, according to a report by ratings firm CRISIL. According to the report, the industry is likely to grow at an average annual pace of 16-17% to Rs 60,100 crore by 2017-18 from Rs 37,700 crore in 2014-15.

Dr Lal PathLabs CEO Om P Manchanda recently said that international revenue accounted for just 1.5% of total revenue and that overseas markets were priority number two. Thyrocare CEO A Velumani recently said there was no plan to expand overseas operations beyond Bahrain and Bangladesh, where it is already present.

Both Dr Lal PathLabs and Thyrocare have made blockbuster stock market debuts over the past year. SRL has also expressed its intent to go public but Metropolis has declined to comment on its IPO plans though speculation remains it might hit the markets anytime.

Metropolis, which started as a single lab in 1980s, received its first external funding of Rs 35 crore from ICICI Venture in 2005. This was followed by fresh funding of $85 million from private equity firm Warburg Pincus, giving an exit to ICICI Venture.

Almost five years down the line when Warburg Pincus expressed its desire to exit, a similar pattern would have likely followed. However, reports of boardroom struggle between the Shah family and GSK Velu, a serial entrepreneur who had been associated with the company since 1998 spilled over the media.

In a surprise twist, the Shah family bought out Warburg Pincus’ 27% stake for Rs 550 crore with the backing of KKR India, increasing the family’s stake from 36% to 63%. Eventually, private equity firm Carlyle bought out Velu’s stake, leading to his exit from Metropolis.

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Metropolis Healthcare exits South Africa, rejigs Middle East business

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