Temasek bets $25.7M in HealthCare Global; EILSF exits with 2.2x returns

Singapore’s sovereign wealth fund Temasek has invested Rs 140 crore ($25.7 million) to pick a stake in Bangalore-based HealthCare Global Enterprises (HCG). The investment, which has primary and secondary component, has also helped life sciences-focused private equity fund EILSF (Evolvence India Life Sciences Fund) exit the company at 2.2x, according to a source privy to the development.

According to sources, a little over half of the deal value is through fresh equity issue and the rest has gone to EILSF.

According to chairman of the company B S Ajaikumar, the newly infused capital will help the company in its expansion plan to develop 19 to 20 centres in the next two to three years.

“Through this primary that we have raised, we are looking at developing 19 to 20 centres in the next two to three years. The development of these centres would be partly as greenfield projects and partly as local partnerships with strong oncology players,” Ajaikumar told VCCircle.

HCG at present has 25 centres in India and Africa and with the addition of the new projects the company will have about 45 to 50 centres in the next three years. The total investment for this expansion will be Rs 250-300 crore and will consist of both equity and debt, Ajaikumar added.

The company, which specialises in cancer care, is developing new centres in Khanpur, Baroda, Amritsar, Delhi, Calcutta, Guwahati and Patna among other cities. In Africa, HCG is developing centres in Kampala in Uganda and Dar-e-Salam in Nairobi.

EILSF scores second exit

This is second exit for EILSF in the last six months, coming close on the on the heels of its 3.2x from Sutures India, a Bangalore-based firm specialising in the manufacture of surgical consumables.

"This was the first investment that EILSF made in 2007. When we first invested HCG had three centres but now they are 18. The topline has grown more than 10 times and the company has become profitable. Dr Ajai Kumar has a plan for building a one-of-a-kind medical institution," said Dr. Anula Jayasuriya, managing director, EILSF. While declining to disclose the quantum of investment and exit, she said that EILSF "has a 2.2x multiple and it's a good exit”.

According to sources, EILSF invested Rs 26 crore in two tranches in the company in 2007 and 2008. Apart from EILSF, IDFC Alternatives' India Development Fund invested Rs 96 crore in two tranches in 2006 and 2007. PremjiInvest also infused Rs 85.4 crore in 2008 and also bought the stake held by India Development Fund along with Milestone Religare in 2011 for Rs 138 crore.

According to Ajaikumar, PremjiInvest is not looking for an exit at present and would stay with the company for the next 2 years. While Ajaikumar did not reveal how much stake Temasek picked in the company, according to sources his stake in the company is between 26-28 per cent.

PE dealmaking in healthcare continues

Private equity deals in healthcare services and medical equipment space reached a record high in 2012 as investors look at a large, recession-proof market with minimal regulatory intervention. According to VCCEdge, the data research platform of VCCircle, there were 35 private equity investments in healthcare services and equipment companies in 2012, worth $841 million. In 2013, there have been 9 deals worth $106 million till date, according to VCCEdge.

Some of the big recent PE deals in the space include Westbridge

Crossover and TA Associates’ investment of $44 million in Dr Lal PathLabs and Trivitron Healthcare receiving an investment of $74.11 million from Fidelity Growth Partners.

(Edited by Prem Udayabhanu)

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