Exclusive: Ranjan Pai says he is looking to unlock \"value in scale\" in Manipal-Fortis deal

作者:Moon    發表日期:2018-03-29 22:37:25


Manipal Hospitals said it will try to unlock the "value in scale" as it emerges as the country's biggest healthcare provider after acquiring the embattled Fortis Healthcare.

The mega-deal will ensure revenues of Rs 5,230 crore, 45 operational hospitals with a capacity of 7,658 beds and an additional 3,400 beds in teaching hospitals run by Manipal Hospitals.

As part of the deal, Manipal and its partner TPG will invest Rs 3,900 crore to buy out Fortis diagnostics arm SRL and hospital assets under Religare Health Trust (RHT).

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Also Read: TPG-backed Manipal Hospitals buys Fortis Healthcare, to invest Rs 3,900 crore

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In an exclusive interview to Moneycontrol, Ranjan Pai, chairman of  Manipal Education and Medical Group (MEMG) that owns Manipal Hospitals, said the company will raise funds through internal accruals and debt to fund its share of the deal.

Excerpts from the interview:

What does this deal mean to you?

It is landmark deal and is a step in creation of the largest healthcare player in the country. For Manipal, this is a big step in getting there. It also gets Manipal listed as a Group and as a company.You have overtaken Apollo Hospitals to be the largest healthcare provider. How are you planning to use the scale that this deal brings in?

Honestly, I am not in the numberd game. Having size only gives better economies of scale from a purchase perspective like consumables, (hiring and retaining) doctors and patient engagement. There is definitely value in scale.

Also Read: Check out the top M&As in the pharma industry

What has led you to go after Fortis, a company that has been reeling under a series of investigations by regulatory agencies?

I think Fortis has got a good footprint, great doctors and good clinical practices and they were the clinching factors. I think the complication of the whole transaction was more about what has happening in the company. That's why it took us little longer and go through this structure. The core assets and stuff, the synergies we can add to it and what Manipal can bring to the table.Given the investigations by agencies such as SEBI and SFIO, do you foresee any problem in the future?  Have you considered those angles?

Yes. Some of the investigation what's going on we are not liable to that because that's mostly related to erstwhile promoters. The other liabilities that are there, are the ones  we usually come across.

Also Read: Singh brothers welcome Manipal’s Fortis Healthcare takeover

Could you give us a break-up of how much funds Manipal and TPG each will be investing?

TPG is putting in about Rs 1800 crore, and we are putting in about Rs 2,100 crore. TPG's shareholding will be about 20.7 per cent in the combined entity while Manipal's share will be around 37.9 per cent)How is Manipal raising the funds?

We are raising through some internal accruals and some amount of debt leverage.How critical was the role of TPG in this deal?

TPG is a great partner. We have been working with them for last three years as investors and known them for four years. It's been a great team effort for us to work on this deal together. It could not have happened without them. They worked very hard to get this deal across. We enjoyed working very closely with them.How do you see the future of healthcare?

There are sectoral challenges in the industry right now. The price caps that are coming in. There is a lot of reputational issues when it comes to private healthcare. So I think some of these things have to be corrected, we need to collectively as an organisation and also as a industry do what is right from a patient perspective. So there are lot of challenges in the industry, but in the end of the day - India given the macro economics and given where we are from healthcare perspective this is an exciting market. If run well and run efficiently could have great prospects for the futureHow are your other ventures like health insurance and education have been doing?Health insurance, we are awaiting the approval of IRDA, which should be coming any day. With health insurance there may be great synergy also with this hospital network. As far as education is concerned it's mainly in training space and that's continuing to grow well.

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