Actis in India healthcare exit

Sterling Hospitals’ promoter has bought back the firm’s 82% in the business. 

Emerging markets private equity firm Actis has sold its investment in Indian healthcare company Sterling Hospitals, according to a company statement.

The firm did not disclose the financial details of the transaction, but some media has reported the sale reached INR 4 billion (€47 million; $65 million).

The firm is selling its 82 percent stake to Addlife Investments, owned by Sterling Hospitals chairman Girish Patel, although its return on the investment is unknown.

Actis had acquired a 41 percent stake in Sterling Addlife India, which owns Sterling Hospitals, in 2006 for $15.5 million. Actis later raised its stake to over 80 percent, with its total investment in the business reaching $47 million between 2006 and 2010, according to the firm.

During its investment period, Actis initiated a series of operational improvements, including implementation of a professional management team, expanding the business to seven sites across the region from just one, and invested significantly in expanding its specialist surgery capabilities, in particular liver and bone marrow transplants.

“Healthcare is an area of focus for Actis,” head of Asia at Actis, JM Trivedi, said in a statement. “Sterling epitomises our ability to help build best-in-class healthcare assets, by bringing in a professional management team and putting in place the appropriate systems and governance.”

Actis' exit comes at a time where private equity firms continue to operate in a strained exit environment. However, Trivedi told Private Equity International exits are not impossible in the right situations.

“If you have a high quality asset in an attractive sector such as consumer or healthcare and controlling share holding it is not difficult to exit,” he said. “If you are a minority investor with very limited rights, you will find it very hard to exit. But if you have strong exit rights and a strong relationship with your partner, majority shareholder, he will do everything possible to get you an exit.” 

Actis is focused on doing buyout transactions in India, with 50 percent of its investments in India being control deals, according to the firm. Actis has so far invested about $1.5 billion in country overall. 

For Sterling, Actis ran a process with a local investment bank for the sale, with Patel putting in the best commercial bet for the firm, Trivedi said.

Actis has now made three healthcare investments in India and China together during 2013. In August this year, the firm invested in Chemclin, an IVD medical diagnostics business in China in a deal worth $70 million. In October, it invested $48 million in Symbiotec Pharmalab, a pharmaceutical company based in India.

“An ageing population, changes in lifestyle, increasing income, and better insurance coverage are driving global demand for high quality medical products and services. This latest exit shows the ongoing value in the sector,” the firm said in the statement.

Other private equity players have also tapped India’s healthcare market this year. In November, Kohlberg Kravis Roberts entered into a $200 million agreement to buy a minority stake in Gland Pharma, an Indian pharmaceutical company, PEI reported earlier.

The deal came just a month after KKR offered a $90 million convertible loan to India’s Apollo Hospitals to address the company debt and build more hospitals.