Rationale

 Material event

 Vide a release to the stock exchanges dated June 28, 2024, Healthcare Global Enterprises Limited (HCG/the company) has entered into a share purchase agreement (SPA) and shareholders’ agreement (SHA) for upfront acquisition of 51% stake, subject to completion of “conditions precedent” as per SPA & SHA, in Mahatma Gandhi Cancer Hospital & Research Institute (MGCHRI/Vizag Hospital), Vizag, Andhra Pradesh while the balance 49% stake planned to be acquired in tranches subject to completion of various conditions set out in the SPA and SHA. The consideration for the acquisition will be in the form of cash. In the first tranche, 51% of the equity share capital of MGCHRI will be acquired by HCG for a consideration of Rs. 207.6 crore by the end of Q2 FY2025 and in the second tranche, 34% of the equity share capital is planned to be acquired for a further consideration of Rs. 155.0 crore within 18 months of the first tranche. The acquisition for the balance 15% stake will depend on the valuation principles in accordance with the terms of SHA. ICRA understands that this investment will aid HCG which already operates a hospital in Vizag to benefit from synergies and economies of scale in the Vizag market. MGCHRI is a 196- bed hospital founded in 1986 and focuses primarily on cancer care. The hospital witnessed revenue of ~Rs. 120 crore in FY2024 with Operating profit margin (OPM) of ~35%.