On May 7, CVC Capital had announced its plan to acquire about 36.48% stake in Healthcare Global Enterprises through a preferential allotment of shares at a price of Rs.100/ share. The new offer is a premium of 33% to the six month average share price of Rs 97.57.
On Thursday, HCG shares are traded at Rs 117.05, up by 2.77%.
According to people in the know, CVC Capital has increased the offer price with anticipating a counter offer from other shareholder Temasek Holdings Ltd. The existing shareholder Temasek Holdings holds a 9.4% stake in HCG.
As per the Agreement, the investors will subscribe to 29.5 million equity Shares and 18.5 million warrants (convertible to equal number of equity shares) of the company at Rs 130 per equity share, aggregating to Rs 625 crore.The investor will make an open offer for the acquisition of up to 32.6 million fully paid-up equity shares, representing 26% stake from the public shareholders of the Company at a price of Rs 130/- per Equity Share (the Offer Price) aggregating to total consideration of Rs 424 crore in cash.Post transaction, stakeholding by promoter BS Ajai Kumar (chairman & CEO) will come down to about 14% from 19.9%. Ajai Kumar, an oncologist-turned-healthcare entrepreneur, has been its CEO since 2005.Other investors in Indgrowth Capital which owns 1.2%.
HCG, which set up its cancer centre network in 1989, had 22 comprehensive cancer centres, three multispecialty hospitals and as many diagnostic centres as of December 2019. In 2013, it entered into the fertility treatment business through acquisition of BACC Healthcare and has eight fertility centres operated under the Milann brand. It also runs bioinformatics, molecular testing and precision diagnostics business under the Strand brand.
At present, the HCG network has 2,063 beds and 300 plus oncologists. In fiscal 2019, the company posted revenue of Rs 978 crore with a loss of Rs 25 crore. In Q3 FY2020, it posted a loss of Rs 29 crore, compared with loss of Rs 6.2 crore a year earlier, on revenue of Rs 278 crore. It had debt of Rs 702 crore as on December 31, 2019.
HCG raised Rs 650 crore through an initial public offering of shares in March 2016. In 2013, it had raised about Rs 140 crore from Temasek.
CVC, which manages $83 billion of assets across the world, had made its debut deal in India in 2018 by acquiring enterprise legal services firm UnitedLex BPO.
An aggressive buyout specialist, CVC Capital Partners is a spin-off from Wall Street banking giant Citigroup’s venture capital business. It recently raised $4.5 billion for its fifth Asia Pacific fund, CVC Capital Partners Asia Pacific V LP.