Hydal, a Monterrey, Mexico-based hospital management group, is in talks with financial investors, including private equity firms, to raise up to MXN 1bn (USD 46.8m) to continue growing, CEO Arturo Garza said.
The venture capital-backed company, which manages two hospitals, is looking to sell a minority stake to a single investor who can provide all of the required capital in installments over the next few years, said Garza. It is speaking mainly to foreign-based investors, he added.
Management hopes to close the stake sale during 1Q21 after starting the process this summer, the executive said. It is working with an internal advisory team on the fundraise, he added.
Hydal, which this month changed its name from Gestion Hospitalaria, plans to use the fresh capital to acquire three new hospital operations, said Garza. It is already performing due diligence on two of the potential target assets, he added without offering further details.
Instead of buying hospital buildings, Hydal acquires the operation and agrees to pay a rental fee to the building owners, said Garza.
Founded in 2014 by Garza and CFO Antonio Salinas, Hydal manages hospitals that have between 20 and 50 beds. Mexico’s hospital market is highly fragmented with around 77% of them having no more than 50 beds, said the CEO.
Hydal’s existing hospitals, which are in Cancun and Mexico City, have a combined 54 beds, according to a company presentation.
Monterrey, Mexico-based VC-firm Stella Maris Partners acquired an undisclosed stake in Hydal in 2014, said the CEO. The remaining stake is owned by the two co-founders, he added.
Garza declined to share Hydal’s financial information but noted that its core hospital management business contributes around 80% of its EBITDA.
The 450-employee company also owns Radiocare, a radiology arm that manages the in-house radiology operations for third-party hospitals, and Vfarma, a specialized pharmaceutical distribution business.
Other hospital management firms operating in Mexico include Grupo Hospitales H+, which is backed by local PE firm Discovery Americas, and Celaya, Guanajuato-based Hospitales MAC, Garza noted.