Temasek to acquire PeakXV’s 20% stake in Cloudnine

Singapore’s Temasek Holdings is close to acquiring Peak XV’s 18-20% stake in Bengaluru’s Cloudnine Hospital for about $125 million, according to three people familiar with the matter.

The deal, which has been in the works for more than a year and a half, could bring a valuation boost to the dedicated maternal and child care hospital Approximately US$600 million, This will also mark Peak XV’s exit from the company after 11 years — Cloudnine raised $16 million in a funding round led by Peak XV (then known as Sequoia Capital) in 2013, the people said, asking not to be named because the matter is private.

Temasek’s $600 million stake includes a small Series A round earlier this year and an upcoming acquisition from Peak XV, one of the two people said, adding that Cloudnine is reshaping its shareholding structure in preparation for a public listing next year.

This will be Cloudnine’s second attempt at an initial public offering (IPO). In 2022, the company had submitted a draft listing. ₹1,200 crore IPO.

“Cloudnine doesn’t need new capital; this is more like a pre-IPO round,” the second person added. In the March quarter, the company raised ₹The investment was made by Temasek and TPG Newquest, which pumped in Rs 359 crore in the initial round of funding.

Peak XV and Temasek spokesmen declined to comment. A spokesman for the company has yet to respond to a request for comment.

Revenue growth

An Icra report in April said Cloudnine’s consolidated revenue grew 26.3% to ₹The profit for the first nine months of FY24 stood at Rs 946.7 crore.

“From independent data, the company’s revenue is ₹The company’s operating margin was 13.8% in Q1 FY2024 compared to 14.3% in FY2023 due to losses incurred by new centres opened in Q4 FY2023 and Q1 FY2024. Going forward, margins are expected to decline in FY2025 due to losses incurred by new centres opened in FY2024 and Q1 FY2024,” the company said.

Founded in 2006 by Dr. R Kishore Kumar, Rohit MA, M. Ramachandra and Vidya Kumar, Cloudnine is a chain of super specialty hospitals that provides mother and child care, including fertility, maternal care, gynecology, pediatrics, neonatology, baby care and stem cell banking. Currently, Cloudnine has 34 centers across India, including Bengaluru, Delhi, Mumbai, Pune, Chennai, Gurgaon, Ludhiana and Chandigarh. Twelve of the centers are located in Bengaluru.

Capital Expenditure Plan

Icra’s press release said Cloudnine plans to set up more locations in metros and Tier 1 cities. “The company’s capital expenditure plan will generate approx. ₹28-30 crore in FY2025.”

Cloudnine competes with hospital chains such as Motherhood, Indira IVF, Apollo Cradle and LifeSpring in the growing maternal and child healthcare market.

According to a Pew Research Center report in July, India’s population is estimated at over 1.4 billion, larger than the population of Europe (744 million) or the Americas (1.04 billion). China’s population is also over 1.4 billion, but China’s population is decreasing, while India’s population is growing. Against this backdrop, the maternal and child healthcare market is expected to grow at a faster rate as Indians spend more on health and wellness.