Evolvence may exit HealthCare Global

Dubai-based alternative investment house Evolvence Capital is looking to exit its five-year old investment in Bangalore-based oncology chain HealthCare Global Enterprises (HCG), but bankers say potential deals could get stuck on a valuation mismatch.

The PE firm had invested $7 million (about R29 crore) in HCG in 2007 and is expecting a 2.2 times return on investment (RoI) in dollar terms and 2.5 times in rupee. The investment was done out of Evolvence India Life Sciences Fund.

Earlier this month, Evolvence exited its investment in medical devices firm Sutures India, by selling its stake to CX Partners.

According to sources, HCG is currently valued at around R600 crore. At present, HCG has around 24 centres in India and one each in Uganda and Kenya (Nairobi). It is looking to expand, for which it needs funds.

Sources said HCG is in discussions with PE firms, but as things stand at the moment, returns from the investment stand at around 1.7 times in US dollar terms and 2.1 times in rupee. "A number of PE firms have invested in super specialty space and are still attracted towards it, but I think the trouble in this case is the huge mismatch in valuation expectation and actual interest by the new investors," says an investment banker who specialises in healthcare M&A deals, on the condition of anonymity.

In 2008, Azim Premji's fund PremjiInvest had invested $20 million in HCG and Milestone Religare invested R31.2 crore in the firm in 2010. Last year, PE firm IDFC PE also sold its investment in the company to the other investors.

The pharma and healthcare space has seen some investments this year like PE firm Goldman Sachs invested $40 million in Nova Medical Centres and Norwest Venture Partners invested $22 million in diagnostics chain Thyrocare Technologies that gave partial exit to its promoter A Velumani. "Five years is a long time to stay invested and most funds are trying to show exits somewhere so they can raise new funds," Avinash Gupta, head – financial advisory at Deloitte Touche Tohmatsu India.

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