Piramal Enterprises in talks to acquire Apollo’s Health Super Hi-Way

Ajay Piramal’s flagship Piramal Enterprises is in advanced piramalnegotiations with the Reddys of Apollo Hospitals to buy the latter’s fledgling healthcare software venture Health Super Hi-Way, in what would be a unique marriage between healthcare and Big Data if it goes ahead.

Apollo patriarch Prathap C Reddy and his four daughters, who control and run India’s largest hospital chain Apollo Hospitals, are all set to sell their majority stake in the company to Piramal, ending months of protracted negotiations, as per multiple sources who are directly involved. Piramal’s “strategic investment” will help turn the company around and provide much-needed monetary support for a push into new digital services in healthcare. Incorporated in 2007, Health Super

HiWayspecialises in patient data mined from hospitals. It was set up in partnership with software services provider IBM to create a national health data network. The firm also offers hosted services for hospitals to manage their IT systems.

Over the last two years, it diversified and designed specialised products enabling doctors and patients to connect and share reports over the internet. The company has also built software to automate processing of insurance claims in the cloud. These new initiatives and products are expected to multiply future revenues. A top official with the company said connected devices — a glucometer that can send sugar levels to the doctor in real time, for instance — are the next big thing in healthcare. Similar efforts to develop code for internet-based services are expected to win more customers and boost revenue for Health Super HiWay.
Piramal is expected to pick up an initial 5% stake for Rs 5-8 crore, highlighting its interest.

Upon submission of a detailed and feasible business plan, this will be raised to 60-80%, valuing the company at close to Rs 220-250 crore. Sources added that Piramal is open to spending Rs 100-120 crore to take control of the venture. The Reddys are likely to stay invested, but as a junior partner.

Currently, the Reddy family and Apollo Hospital investment vehicles — PCR Investments and Indian Hospitals Corp — together hold over 90% of the company.

According to one of the persons cited above, Piramal was initially keen on a takeover but has agreed to a controlling stake to the accommodate Reddys’ intent to stay invested in the eight-year-old company. So far, the venture has barely managed to break even. Company data culled from the corporate affairs ministry show revenues have continuously slipped from Rs 2.5 crorein 2011-12 to Rs 1.3 crore in 2013-14. It posted aRs 3.61 crore loss in 2012-13, although these narrowed in 2013-14.

Healthcare information management and analytics are a growing field of interest for Piramal, the turnaround specialist having spent $635 million to acquire Decision Resources Group in the US in 2012.

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