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It’s said patience is a virtue. And in the case of Manipal Health Enterprises Pvt. Ltd (MHEPL), this virtue could even mean a long-term value. After nearly four years After nearly four years Fortune India Manipal Hospitals: Just what the doctor ordered Read more , Manipal Hospitals has finally set in motion its wheel to acquire AMRI Hospitals from Emami Group. This is the latest in a series of strategic acquisitions by MHEPL, after hospital chains Columbia Asia and Vikram Hospitals, and diagnostics company Medcis Pathlabs. MHEPL bought all three in 2021.

After paying a premium worth over 100% of net assets acquired in Vikram as well as Columbia Asia Hospitals, the Bengaluru-based company has become the second-largest hospital chain in the country with an estimated capacity of 8,700 beds across 28 locations.

And how will it be of value, you ask? Here’s how.

The AMRI deal will likely be the last piece of the puzzle MHEPL is assembling for its much-awaited initial public offering (IPO). The latter is expected to file for the listing by March 2023.

With AMRI currently operating three hospitals in Kolkata and one in Bhubaneswar, the acquisition will facilitate Manipal’s smooth entry into the eastern region of the country. Right now, it’s only second to Apollo Hospitals, which has a capacity of over 12,000 beds across its 72 locations pan India.

MHEPL, which comprises the hospitals and related healthcare business of Manipal Group, is valued (before AMRI’s acquisition) at around Rs 24,200 crore (~$3 billion), according to The Ken’s estimates. We arrived at this valuation taking into consideration MHEPL’s Ebitda Ebitda Ebitda Earnings before interest, taxes, depreciation, and amortization for the year ended March 2022, along with an EV/Ebitda multiple of 23.5x (median multiple of similarly-sized companies in its sector).

Now let’s evaluate the numbers to figure out if this cash-burn-driven inorganic growth will fructify Manipal’s way to its public listing.

Buying its way to Dalal Street

For now, Manipal’s maiden goal may be to corner a larger pie of India’s healthcare sector. As evident from its shopping spree during the last two years, MHEPL has tapped into Indian geographies it hadn’t before, spending a little over Rs 2,250 crore (~$275 million) on its three acquisitions. With the AMRI deal reportedly valued at around Rs 1,800 crore ($220 million), Manipal’s expenditures will likely surpass the half-a-billion-dollar mark.

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This chain of events started right around the peak of the second wave of Covid-19, when in April 2021, MHEPL acquired the Indian operations of Columbia Asia Hospitals from Columbia Pacific Management for a total purchase value of Rs 1,792 crore (~$220 million).

AUTHOR

Gaurav Tyagi

Gaurav covers the money trail around everything startups and internet economy. A graduate from the University of Delhi, he joined Institute of Chartered Accountants of India before finding his way to research and journalism. Apart from being a petrolhead, he pretends to be Ari Gold on weekends.

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