The offices of Ranjan Pai, Chairman of Manipal Education and Medical Group (MEMG), on the 15th floor — the top-most — of JW Marriott Hotel located on the upmarket Vittal Mallya road, overlooks one of Bengaluru’s gorgeous gardens. Nearly a decade ago when Pai brought this property, it was one of the most expensive commercial real estate deals the city had witnessed. A sea of tree tops from Cubbon Park, which abuts the State’s centre of power, Vidhana Soudha, greets the eye from Pai’s office.

It is from here that the 51-year-old Pai, a savvy but under-the-radar billionaire — who shuns the spotlight — pulled off a coup last month. After months of speculation, the Singapore government-owned fund Temasek, which had an 18 per cent stake in Manipal Health Enterprise (MHE), bought an additional 41 per cent stake in the company. It valued the enterprise at a little over ₹40,000 crore and the transaction was effectively the largest deal in the Indian healthcare sector.

Temasek – Manipal’s old, yet new money pal

However, there was some degree of surprise to long term observers of the Manipal group. For the first time the group has ceded majority in one of its two core ‘eternal sunrise’ businesses of education and healthcare. The promoters now hold 30 per cent in MHE and 59 per cent is with Temasek-owned entities, with rest owned by an alternative asset manager, TPG fund.

Asked about this anomaly, Pai laughs and says, “Yes, this is the first time (that such a thing is happening). But we don’t intend to take our stake below 30 per cent and nothing has changed, it is just reshuffling of stakes held by the same set of players. The existing professional management will continue to run the show. The stake dilution will partly help in paring down our debt. And the name on the door will continue to be Manipal.”

MHE today has a pan-India footprint of 29 hospitals across 15 cities with 8,300 beds, with more than 4,000 doctors, who last year treated nearly 5 million patients. Once the Kolkata-based AMRI hospital chain with 1,200 beds — a ₹2,400 crore deal which MHE is on the verge of completing next month is done — it will overtake Apollo as the hospital chain with most beds in the country.

National ambitions

While MHE was always a significant player in South India, it was considered as an also-ran nationally. In the last decade, under Ranjan Pai’s stewardship, it has made a dramatic shift to emerge as the largest player. The CEO of a large listed player in the space, who did not want to be identified, says, “Ranjan has played his cards shrewdly. Even 2-3 years back they were significantly behind in scale compared to a few others. Since then they acquired Columbia Asia for ₹2,000 crore, Vikram Hospitals for about ₹350 crore and now AMRI for ₹2,400 crore. While they accumulated debt for these acquisitions, however, with this stake sale, Pai now has a 30 per cent stake in a much larger pie. Economies of scale bring their own advantages.”

Compared to some of his listed peers like Apollo Hospitals, Narayana Health and Global Health, Pai — a trained medical doctor himself — has ensured that Manipal obtains rich valuations even amidst tough market conditions. “With half the revenues of the market leader, he has been able to swing a pretty good deal. Even assuming 10,000 beds, at the valuation he has got, it is around ₹4 crore per bed, which is pretty high,” avers the CEO of the competitor quoted above.

The hospital chain has no plans of slowing down in spite of all the recent activity. Excluding the already concluded AMRI deal, it has lined up a war chest of ₹3,000-4000 crore for further inorganic expansion in FY24 alone, with market sources indicating that the Kerala-based KIMS health care chain being the possible next target.

While refusing to confirm any such move, Pai, commenting on future acquisition opportunities, says, “Money will come from the balance sheet and maybe a bit of borrowing,” clearly indicating the ambition to consolidate its position as the number one chain. He is at pains to emphasise though that more than numbers it is clinical excellence, patient centricity and margins which are key metrics.

The road ahead

While he is cagey about revealing numbers citing Manipal’s privately held nature, Pai might be eyeing significant growth in the insurance business and the education sector where the group also has extensive interests. Given that he would be sitting on a few thousand crores of funds from the stake sale, even after paring down debt, he is already plotting his subsequent moves.

The company is eyeing at least $100 million of PE funding in the Manipal–Cigna insurance business, to fuel its next stage of growth. In its core education sector, through MAHE (Manipal Academy of Higher Education), it offers courses in medicine, engineering, dentistry, pharamacy, nursing, hotel administration and numerous other areas. MAHE has campuses in Mangaluru, Bengaluru, Dubai and Malayasia. More than 41,000 students from nearly 57 countries pursue courses offered by MAHE.

A lesser-known fact is that several well-known names such as current Microsoft CEO, Satya Nadella, Union Minister Rajeev Chandrasekhar, former Nokia CEO Rajeev Suri, are all Manipal alumni. With the government opening-up the education sector for more investment opportunities, Manipal, which has an established brand name, could use its disposable funds to expand its offerings further.

Pai, however, clarifies that currently MAHE is operated by a not-for-profit trust, unlike say UNext, its higher education learning platform. The group expects to invest $50 million this year to scale UNext. Also, as the Co-founder of Aarin Capital, which has investments in numerous companies such as Byju’s, PharmEasy, HomeLane and FabHotels, Pai has a pulse on the start-up scene in the country. Apart from that, in his personal capacity too, he has invested in at least five start-ups.

For the low-key entrepreneur — whose wealth Forbes estimates to be around $2.8 billion — the recent moves may be the precursor for laying the foundation for MEMG’s next phase of growth.