TPG widens hold on Indian healthcare sector with Fortis deal

The acquisition of Fortis Healthcare marks the end of another chapter in the well-carefully crafted India story of TPG Capital, the private equity major based out of Texas and California.

TPG has partnered with Ranjan Pai's Manipal Hospitals to buy  Fortis Healthcare, it said on Wednesday. The two companies will together invest Rs 3,900 crore in the merged entity, of which TPG's share will be Rs 1,800 crore.

The latest acquisition will build on TPG's impressive healthcare portfolio in India. TPG follows a strategy of both organic and inorganic growth to build its portfolio. Healthcare and financial services are the two sectors it invests in the most.

TPG declined to comment on a query sent by Moneycontrol.

In 2015, TPG Capital had bought a 'significant minority stake' of 21.5 percent in Manipal Health Enterprises for around Rs 900 crore.

With the two investments, TPG now has a significant pie in the largest healthcare company in India.

Healthcare play

Through its numerous arms, TPG has invested in companies that play a niche role in the healthcare sector.

For example, in 2013, TPG invested in Sutures India, which is the country’s largest manufacturer and exporter of surgical sutures, and held about 23 percent in it. Over time, it increased its stake to 73 percent and according to reports, is planning to pare it down.

It is not just mainstream hospitals that the company has a stake in.

In 2016, TPG Growth announced that it had acquired a majority stake in Rhea Healthcare, which ran a chain of mother-and-child care hospitals under the brand Motherhood. Rhea Healthcare was promoted by Malayalam superstar Mammootty and his family. The deal size was Rs 220 crore.

In the same year, the company, which manages more than USD 79 billion globally, announced that its arm TPG Growth had bought a majority stake in Cancer Treatment Services International, which is a cancer-treatment provider in India and South Asia.

And beyond

In India, TPG is headed by Puneet Bhatia, an MBA from IIM Calcutta and a B.Com from Delhi's SRCC. Prior to joining TPG Newbridge Capital in April 2002, he served as the CEO of the private equity group at GE Capital Services India, and also had a stint at ICICI Bank.

Given his work in the financial services sector, the India portfolio of TPG also reflects interest in the industry.

In 2016, Janalakshmi Financial Services had raised USD 150 million via a round of primary equity financing backed by TPG. In 2017, TPG led another round of funding for the Bangalore-based microfinance company, which will soon launch its own small finance bank.

Exits by the TPG have also not been uncommon. The company had invested in Shriram City Union Finance in 2009, but sold its 20.3 percent stake in the company in 2015.

Similarly, reports suggest that TPG Capital Asia is looking to exit Vishal Mega Mart (co-owned with Shriram Group) and several bids have been received.

Industry watchers reckoned TPG's idea is to enter a business when it is small and exit it once it starts making money. Also, its focus is on finding hidden gems and invest in them while other large investment firms run after large brands.

TPG’s India portfolio:

TPG Growth:

Cancer Treatment Services International

TPG Capital Asia:

Vishal Mega Mart

The RISE FUND: