We’re not exiting healthcare, says Manipal’s Ranjan Pai

Now that Temasek has taken control, what is the next step for Manipal Hospital?

Manipal Hospitals will continue to grow. We are not exiting, and still have a significant stake. We have brought in long-term investors, as patient capital is required in this industry. We also had to give a partial exit to TPG, which is how the process started. When Temasek wanted to increase its shareholding, as they wanted to invest more in healthcare in India, we had a perfect combination.

Will Temasek run the business?

Manipal Hospitals has always been a board-managed company and that will continue. We will not change what has worked for us. (Dilip Jose is the chief executive officer). Manipal Education and Medical Group (promoters) have only been involved in acquisitions and some fundraising. Everyone, including our investors, will play a role.

What is the outlay for acquisition Manipal Hospitals is looking at for FY24 ?

In FY24, we will have another ₹3,000-4,000 crore for acquisitions. This excludes our deal to acquire AMRI Hospitals.

Where will the money for acquisitions come from?

Mainly from the balance sheet, but there may also be some borrowing.

Do you need to plug some gaps?

Given that India needs a lot more hospitals, we are looking at taking over any hospital, upgrade the infrastructure and put in more state-of-the-art equipment and strengthen the clinical programmes. We are not really focused on any particular region, as every region requires health care. We normally go for general specialty.

Will acquisitions such as that of Care Hospitals also be of interest to Manipal?

At this time, we have our hands full. I do not know if we can look at Care Hospitals.

When will Manipal consider a public list, given the earlier timeline of 24-36 months?

We will look at an IPO when the time is right. The timeline may get pushed but we will explore from time to time.

Can you give us a sense of Manipal’s FY23 growth?

Without any acquisitions, we should grow our topline by 15%.

Promoters have cashed out over a 20% stake through this deal. Is the plan to invest in other areas?

A part of the reason was to pare down some debt, and to get into new areas. But at this point, honestly, the main reason was to also get the right long-term partners for our healthcare business. With Temasek, we found someone who can look at healthcare for the next 10-20 years. We are also not looking at divesting anything more in healthcare. We will look to invest back in healthcare (through Manipal) at a later date.

What new areas will the group be invest in?

We already have an edtech startup UNext, where we want to invest $50 million in FY24. We will also invest in our health insurance platform ManipalCigna Health Insurance. We may look at external capital for our health insurance platform.

Either we bring external investors on board or both Manipal and Cigna will invest further. Right now, it is a 51:49 joint venture.

Will you raise external capital for the insurance business?

We have not decided about it but it is always good to have a different perspective that PE brings to the table. At Manipal Group, we have done well with PE partners. Over the past 15-17 years, we have seen so many rounds of private equity investments with good exits. It has benefited both. We have a good track record with PE and partnering with them to help us also improve our business. We are exploring all options,

Would you be looking to invest more behind your stem cell business (Stempeutics) that you have been building with Cipla?

We already have another investor for Stempeutics. There are two products that were just launched and look promising. We might look at doing a fundraise in the future, when we begin our trials in the US. But for now, in FY 24, we are not looking at it.

How do you see the growth come about in the diagnostics business?

That is under Manipal hospitals and it continues to grow well.

You mentioned that some of the money raised through the secondary stake sale will go towards paring debt. Can you elaborate on that?

We have in the past raised debt for investing in our other businesses, some of them for hospitals, some of them for the education one. We had bought out some of our private equity investments in the past from that (using debt).

Outside of education, would you be looking at investing anything?

We will selectively look at hospitals across the country.

What are the inorganic growth opportunities you would be looking at?

Our inorganic growth plans would likely be limited to ₹3000-4000 crore unless we find and honestly, if we have the appetite to do more. We will continue to grow but who knows if there’s a good opportunity that comes up and all parties are okay.

There has been some commentary on the high valuation at which the Temasek deal has been done at ₹40,000 crore- ₹42,000 crore. What do you have to say?

I don’t want to comment on the valuations, but I think it’s been a fair value. Temasek has already been invested in this unit for the last five to six years. So, I think they’ve got comfort on governance standards and the growth pipeline we have. So, I think it’s a fair valuation, per se.

Are you looking at investing more in the startup ecosystem, in areas outside of education and healthcare?

We have invested a lot in the Indian startup ecosystem. We believe in that. The kind of quality of entrepreneurs that are coming out of the Indian ecosystem is very, very promising and yes, we will look at continuing to invest in the ecosystem,

Would that be through funds or direct investments?

So, we do have some investments in funds but now we will do this directly.

How have your investments as an angel investor in startups performed?

They have done really well. We were invested in Byju’s, Pharmeasy among others where we have now exited. There are some more investments in companies such as Incred which we are excited about.

Would you be looking at investing more in Incred?

Right now it is well capitalised, I think.

Have the valuations in the startup ecosystem cooled off?

Valuations are much more attractive right now in the startup ecosystem. They have definitely come off a bit. But like I said, these are cycles and yeah, it is attractive. It’s important for the ecosystem not only to continue to invest in something for people to invest in the ecosystem, because you need the following rounds, right, you need the next round for the company to survive. So, I hope that it’s not too long a winter, and people will come back.