CVC Capital Considers Sale of Majority Stake in HealthCare Global 2023
CVC Capital Partners, a leading private equity and investment advisory firm, is reportedly considering the sale of its controlling stake in HealthCare Global (HCG), one of the premier cancer care network providers.
This move, if consummated, would mark another significant deal in the healthcare sector, indicating a reshuffling of assets among major institutional investors.
CVC Capital Partners acquired a controlling stake in HealthCare Global a few years ago, at a time when the healthcare industry was undergoing rapid transformation and growth.
The acquisition was seen as a strategic move by the firm to tap into the expanding healthcare market in Asia, particularly in India, where HCG has a significant presence.
According to those with knowledge of the situation, CVC Capital Partners is considering selling its majority investment in the network of Indian cancer hospitals owned by HealthCare Global Enterprises Ltd.
According to the sources, who requested anonymity because the information is confidential, the private equity firm is attempting to find purchasers for its 60.4% stake in the Mumbai-listed company. According to information gathered by Bloomberg, CVC’s share is worth around $358 million.
According to one of the persons, the buyout company may want a premium of at least 20% for the shares. Depending on the state of the market, it can potentially demand a 50% premium.
In the first hour of trading on Wednesday in Mumbai, shares of HealthCare Global increased by as much as 5.5%, marking their largest gain in more than three weeks. This year, the stock has increased by over 23%, giving the business a market worth of $593 million.The persons stated that discussions are in their early stages and there is no assurance they will lead to a contract. A CVC spokesman declined to comment, while a HealthCare Global representative did not return inquiries for comment.
The need for private medical services in Asia has increased due to an ageing population and a growing middle class, which is boosting transaction activity in the healthcare industry. According to a story by Bloomberg News earlier this month, TE Asia Healthcare Partners and Luye Medical Group are both considering selling their respective cancer businesses in Singapore and Hong Kong, respectively.
According to its website, HealthCare Global, which was established in Bangalore in 1989, operates 24 comprehensive cancer centres in India. Every year, it treats more than 200,000 patients. In 2020, CVC acquired a majority interest in HealthCare Global by purchasing new shares and convertible warrants. Later, it bought further shares via an open offer that was required.
HealthCare Global, with its focus on oncology and speciality hospitals, has become a leader in cancer care in India. The organization has been at the forefront of providing high-quality and affordable care to patients, leveraging cutting-edge technology and research.
Like all private equity players, CVC’s core objective is to realize a return on its investments. Given the considerable growth and expansion of HCG under its stewardship, it’s likely that CVC sees a potential for a profitable exit.
The healthcare sector, especially in developing economies, continues to evolve. With rising incomes, awareness, and governmental push towards health infrastructure, the market for premium healthcare services has expanded. CVC might see this as an opportune time to offload its stake at a premium.
CVC, as a diverse private equity player, might be seeking to reallocate its portfolio towards other emerging sectors or geographies.
While speculative, it’s possible that CVC needs to raise liquidity for other ventures or to return capital to its investors.
Other private equity players might see value in taking over and further scaling the operations of HCG.Large global healthcare chains might view this as an opportunity to establish or expand their footprint in the Indian subcontinent.
Given the stable and growing nature of the healthcare industry, institutional investors like pension funds or sovereign wealth funds might see this as an attractive long-term investment.
The sale of CVC’s controlling stake in HCG could usher in a new era for the company. A new investor or owner might bring in fresh capital, perspectives, and strategies, possibly leading to further expansion or diversification of services. Alternatively, the change might lead to a consolidation or integration with other healthcare assets owned by the new stakeholder.
While CVC Capital’s consideration to sell its stake in HealthCare Global is a significant move in the healthcare investment landscape, it underscores the dynamic nature of investment strategies and the constant churn in the global private equity world. Whatever the outcome, it’s evident that HCG, with its prominent position in the oncology care sector, will continue to be a significant player in the healthcare industry.
