TPG sells Cancer Treatment Services International to Varian for $283m

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US-based private equity firm TPG Capital on Tuesday signed a definitive agreement to sell its chain of cancer treatment hospitals, Cancer Treatment Services International (CTSI), to silicon valley cancer care business, Varian Medical Systems, for $283 million.

The sale marks the first exit for Asia Healthcare Holdings (AHH), which invests and builds early stage single-specialty healthcare delivery businesses through TPG’s middle market and growth equity fund TPG Growth. The transaction, the company said, would close in two weeks if all conditions of the agreement were met.

“We invested in CTSI in 2016 with the belief that the company was in a strong position to address a substantial and growing need for quality cancer care in India. Today, CTSI is one of the largest and leading providers of high-quality oncology services across the country and broader South Asia,” said Matthew Hobart, partner at TPG Growth. “CTSI’s growth story is an example of what we are trying to achieve through AHH, which is to provide dynamic single-specialty healthcare companies the resources and expertise to meaningfully build and scale their businesses. The transaction today marks an exciting step for CTSI and an important milestone in AHH’s evolution as one of the leading healthcare platforms in South Asia,” he said.

The cancer care platform, which operated from one facility in Hyderabad three years ago, has grown to a network of 11 cancer hospitals with a pipeline of six more across India and South Asia. Co-founded by a group of physicians and industry experts in 2006, the facilities provide comprehensive cancer treatment through an integrated IT-based model and in partnership with several brands such as the American Oncology Institute, US-based CTSI Oncology Solutions and AmPath, an integrated reference laboratory and pathology services provider in India. The company has more than 1,500 employees across its operations in India and the US.

In India, AHH has invested in several healthcare startups, including the recent acquisition of Nova Fertility that operates India’s second-largest network of in-vitro fertilization (IVF) centres with 20 facilities across 15 cities. The fund also invested in Bengaluru-based Rhea Healthcare Pvt Ltd, an operator of hospitals for women and children under ‘Motherhood’ brand.

So far, TPG’s global healthcare investing franchise invested $14 billion of equity in the sector, of which nearly $3 billion of equity was invested outside the US, across leading healthcare delivery networks, including Parkway Holdings (Singapore), Healthscope (Australia), Manipal Health (India), Asiri Health (Sri Lanka), and United Family Healthcare (China).

“Leveraging TPG’s global healthcare franchise, we worked together to grow CTSI from sourcing to exit,” said Vishal Bali, chief executive officer of AHH. Majority positions in early-stage entities gives our team the unique opportunity to mold the future of these companies by giving them the right management teams, capitalisation, and profitable-growth trajectory. CTSI validates this unique approach to Indian healthcare, he said.

The healthcare sector has seen some major private equity investments in recent years.

In December, Radiant Life Care Pvt Ltd, backed by private equity firm KKR and Co., agreed to buy a controlling stake in Max Healthcare Institute Ltd.

In April 2018, Apax Partners Llp bought Bengaluru-based medical devices company Healthium MedTech Pvt Ltd (formerly known as Sutures India) for $350 million from TPG Growth, CX Partners, and founding shareholders.

In June 2018, General Atlantic invested $130 million in Hyderabad-based Krishna Institute of Medical Sciences to acquire a significant minority stake. In 2017, home-grown PE firm True North had invested $200 million in Kerala Institute of Medical Sciences.

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