Sri Kauvery Medical Care (Kauvery Hospitals) has signed an all-cash deal valued at Rs1.52bn ($18.5m) to buy the hospital business of India’s Fortis Healthcare in Vadapalani, Chennai, India.

In a stock exchange filing, Fortis said that the sale forms part of its portfolio rationalisation plan, allowing it to focus on key geographic clusters with a significant footprint.

Subject to the fulfilment of certain customary conditions, the deal is expected to close by the end of July this year.

Commissioned in October 2020, the Vadapalani facility presently comprises 110 operational beds and has the potential to boost the bed capacity to nearly 200.

Fortis Healthcare managing director and CEO Dr Ashustosh Raghuvanshi said: “The divestment of Arcot Road hospital business operations is in line with our stated intent of optimising our hospital assets keeping in mind our key markets and regions.

“This also underpins our focus on improving our overall profitability and margins in the segment, allowing us to re-allocate capital in our key clusters.”

For Kauvery, the purchase aligns with its expansion strategy in Chennai. It adds to the group’s existing facilities of over 500 beds at Alwarpet and Radial Road.

Kauvery Group of Hospitals founder and executive chairman Dr S Chandrakumar said: “We are focused on our growth plan to become a leading and trusted healthcare provider in South India. With this acquisition, we will have 750+ beds in Chennai.”

Kauvery Group of Hospitals founder and managing director Dr S Manivannan said: “Kauvery continues to provide best-in-class personalised care, with the highest standards of clinical excellence and ethical practices. This acquisition helps us to expand our care to more regions in Chennai.”