Carlyle ends boardroom spat at India's Metropolis

The US private equity firm's purchase of a stake in the pathology laboratories chain signals an end to a boardroom battle triggered by Warburg Pincus' exit earlier this year.

The Carlyle Group said on Wednesday it had acquired a stake in Metropolis Healthcare, a chain of pathology laboratories in India, signaling an end to a boardroom battle between the founders. 

Rival private equity firm Warburg Pincus sold its 27% stake in Metropolis in April to the Shah family which triggered a change of control and the end of a long-running power struggle between the founders, Sushil Shah and GSK Velu. 

The Shah family used financing from KKR to complete the purchase. Carlyle is acquiring the stake held by Velu and his affiliates. Financial details were not disclosed.

India has become a more popular destination for private equity to put cash to work again after several years of poor returns. The rush to invest mostly follows the election of reformer Narendra Modi. Carlyle is also betting that the country’s rising middle class drives demand for better healthcare products and services.

Private equity has raised about $3.5 billion to put to work in India so far this year, up from $2.7 billion last year and $1.8 billion in 2013, according to data from Asia Private Equity Review. The value of investments year to date has climbed to $9 billion up from $7.8 billion in all of 2013.

Metropolis Healthcare has a presence in India, Sri Lanka, United Arab Emirates, South Africa, Kenya, Mauritius and Ghana.

Led by CEO Ameera Shah, Sushil's daughter, it also has a network of 130 laboratories with more than 1,000 collection centers in India.

“Metropolis has developed a strong brand name and established a broad retail franchise in India,” Carlyle’s Neeraj Bharadwaj said in a statement.

Carlyle has previous experience in the Asia Pacific healthcare sector with investments in Healthscope in Australia, Meinian Onehealth and Concord Medical in China, as well as Global Health in India.

The Carlyle Group has invested $1.3 billion of equity in more than 30 transactions in India as of June 30, 2015. Carlyle is using equity from its fund Carlyle Asia Partners IV for the deal.

Avendus Capital and Veda Corporate Advisors served as financial advisors, E&Y served as commercial advisor and Ropes & Gray, Luthra and Luthra, Khaitan & Co and Shardul Amarchand Mangaldas & Co served as legal advisors to the transaction.

Co-founded in 1981 by Sushil Shah, Metropolis offers more than 4,500 varieties of tests. Processing 15 million tests a year, Metropolis works with more than 10,000 laboratories, hospitals and nursing homes, as well as 200,000 doctors.

In the last 10 years, Metropolis has expanded into new service lines like clinical trials, hospital lab management, home health services, preventive health check-ups, and corporate & wellness solutions.

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