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Reliance Industries Invests in Karkinos Healthcare, Acquires Controlling Stake
Team Finance Saathi
28/Dec/2024
What's covered under the Article:
- Reliance Strategic Business Ventures (RSBVL) invests Rs. 375 crore in Karkinos Healthcare.
- Karkinos becomes a step-down wholly-owned subsidiary of Reliance.
- The acquisition is part of Reliance’s expansion into health services and technology-driven cancer solutions.
On December 28, 2024, Reliance Industries Limited (Scrip Code: 500325) made a significant move in expanding its health services business portfolio by investing in Karkinos Healthcare Private Limited. This investment was made through Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of Reliance, which has subscribed to 1,00,00,000 equity shares of Karkinos at a value of Rs. 10/- per share, aggregating to Rs. 10 crore. Additionally, RSBVL was allotted 36,50,00,000 Optionally Fully Convertible Debentures (OFCDs) at the same value, totaling Rs. 365 crore.
This transaction was part of an approved resolution plan for the resolution of Karkinos Healthcare, which had previously been undergoing financial restructuring. As part of the plan, Karkinos cancelled the existing 30,075 equity shares held by previous shareholders. Following the allotment of the new shares to RSBVL and the cancellation of the old ones, Karkinos has officially become a step-down wholly-owned subsidiary of Reliance Industries.
Karkinos Healthcare Overview:
Founded in 2020, Karkinos Healthcare specializes in offering technology-driven solutions for the early detection, diagnosis, and management of cancer. Despite being relatively new to the market, the company has shown notable progress. The turnover for Karkinos over the past three fiscal years was Rs. 21.911 crore for FY 2023, Rs. 0.918 crore for FY 2022, and Rs. 0.004 crore for FY 2021, reflecting its growth trajectory.
The acquisition aligns with Reliance’s strategy to bolster its health services sector, an area that is poised for growth in India and globally. By integrating Karkinos’ technology into its broader healthcare portfolio, Reliance aims to offer cutting-edge solutions in cancer care, leveraging both digital innovation and healthcare expertise.
Regulatory and Legal Aspects:
The resolution plan for the acquisition was approved by the Hon’ble National Company Law Tribunal (NCLT), Mumbai Bench, and no further regulatory approvals were necessary for this transaction. Importantly, the deal does not qualify as a related party transaction, and none of Reliance's promoters or group companies have any direct stake in the transaction.
Impact on Reliance’s Business Strategy:
This acquisition is part of Reliance Industries’ broader strategy to diversify and expand into key sectors such as healthcare, digital services, and sustainable energy. The healthcare sector, particularly cancer diagnostics and treatment, presents a significant growth opportunity, and this investment will help Reliance solidify its position as a leader in both technology-driven healthcare and innovative medical solutions.
Next Steps and Future Developments:
With the completion of this transaction, Karkinos Healthcare is now a step-down wholly-owned subsidiary of Reliance, and Reliance Industries will continue to integrate the company into its operations. Over the coming years, the focus will be on scaling Karkinos' services to reach a broader audience and enhance its cancer-related solutions.