Manipal Group Set To Acquire Emami's AMRI Hospital Chain

Manipal Group is in advanced talks with Emami Group to buy the latter's AMRI hospital chain at an enterprise value of around Rs.1,500 crore, two people aware of the talks said, adding that a deal is likely to be announced soon. While talks between Ranjan Pailed Manipal Group & Emami have been going on for some time, the parties have failed to come to an agreement on the valuation of AMRI Hospitals until now, one of the people said on the condition of anonymity.

"Manipal was offering an enterprise value of around RS. 1,500 crore for the hospital chain, but Emami Group was seeking a higher value. However, in recent weeks, the groups have come closer to an agreement on the valuation, and the deal is likely to be signed soon", the person said. Hospitals were hit hard during the pandemic, as patients avoided performing the highmargin elective procedures for fear of contracting COVID. However, the ebbing of the pandemic has led to a rebound in patient volumes, making hospitals more attractive to investors. Stronger hospital operators have been buying out weaker chains amid consolidation in the space.The larger operators are trying to use their scale to squeeze more profits from smaller chains.

Emami's AMRI Hospitals has three super speciality hospitals in Kolkata and the fourth one in Bhubaneswar. The chain has a capacity of 1,200 beds across the four hospitals. Emami group declined to comment on the

development, while Ranjan did not respond to any queries. In January, rating agency Care Ratings raised the credit rating of the AMRI hospital chain to BBB+ from BBB, citing improvement in profitability of the company.

However, the rating agency noted that "due to continuous net losses reported by the company in the past, the net worth of the company has turned negative. The company's total debt to profit before interest, lease rentals, depreciation, and taxation remained high at 21.36X as of 31st March 2021 due to high reliance on debt". Care added that as of 30 September 2021, the company's total debt stood at Rs.1,654 crore (Rs.1,587 crore as of 31st March 2021), with the majority comprising unsecured loans from promoter group companies( Rs.1,352 crore).

Over the past few years, the Kolkata-based Emami Group has divested non-core assets to make the group debt-free. In February 2020, it sold its cement business to Nuvoco Vistas Corp., a Nirma group company, at an enterprise value of Rs.5,500 crore. At the time of the sale, Emami Cement operated an installed capacity of 8.3 million tonnes per annum. The same year, the group also sold its solar power business to Canada's Brook field Asset Management. In 2019, the group's founders sold 20 percent of their flagship household goods company, Emami,for Rs.2,830 crore.

The Indian healthcare sector has been seeing a flurry of deal making lately. In July, ASG Eye Hospitals raised Rs. 1,500 crore from General Atlantic, Kedaara Capital, and other existing investors to fund its growth plans. Last year, Dr. Lal Path Labs acquired diagnostics chain Suburban Diagnostics in an all cash deal at an enterprise value of Rs.925 crore. The Economic Times reported last week that strategic and private equity investors, including Blackstone, CVC Capital, Temasek & Max Healthcare are in the race to acquire Care Hospitals from Evercare a wholly owned entity of private equity firm TPG Growth, for around Rs.7,500 crore.