Having built a billion-dollar education and health care business in less than 15 years, Ranjan Pai of the Manipal Education and Medical Group is now investing heavily in tech and life sciences startups
Ranjan Pai
Chief executive and MD, Manipal Education and Medical Group (MEMG)
Rank in the Rich List: 57
Age: 41
Net Worth: $1.75 billion
Big Challenge Faced in the Last Year: Policy paralysis and liquidity tightening in the market
The Way Forward: To grow aggressively in health care with a possible IPO in the next 3-4 years. Entering the health insurance business
It is rare for a well-managed fund to re-enter a company it has already exited profitably with its single largest investment ever. For Premji Invest, Manipal Global Education Services (MaGe) has proved to be just that tempting. Word on the street is that within a year of exiting, the family office of Wipro chairman Azim Premji is pumping in a fresh round of $150 million into MaGe, the education business of Manipal Education and Medical Group (MEMG). And those familiar with this development know exactly how big a role Ranjan Pai, the 41-year-old chief executive and managing director of MEMG, has played in this validation.
Ranjan started MEMG in 2000 in a small rented house near MG Road, Bangalore’s central business district, with an initial capital of $200,000. Over a span of 14 years, he has grown his company into a billion-dollar business. He has diversified from the family’s not-for-profit education trust, Manipal Academy of Higher Education, and built MEMG, which runs education and health care services. Since its inception, the entrepreneur’s company has grown at a compound annual growth rate of 20 percent, and currently has revenues of more than Rs 5,000 crore. Nearly 60 percent of its business comes from education.
Ranjan’s success in health care and education—both highly regulated areas—has been hard won. In some part, he owes his accomplishments to what he calls his “wake-up call”, when as a teenager he failed to get admission into his family’s institute, the prestigious Kasturba Medical College (KMC) in Manipal. He had no choice but to enrol in a lower-ranked institute before transferring to KMC in his second year. “This incident made me realise that I had to make it on my own,” says the non-practicing doctor.
The Pai family has been operating in the field of education for three generations and, under the aegis of Ranjan’s grandfather Dr Tonse Madhava Ananth Pai, it set up India’s first private, self-financed medical college in 1953. Ranjan graduated with a medical degree from this institute.
His grandfather put Manipal on India’s education map, and Ranjan has taken the family name a step further by establishing a separate corporate entity through MEMG. “My initial plan was to settle down in Manipal and continue with what my grandfather and father (Padma Bhushan awardee Ramdas Madhav Pai, also the chancellor of Manipal University) have built,” Ranjan says.
That changed after he went on a fellowship to study hospital administration at the University of Wisconsin-Madison, USA.
“When I moved to the US in 1996, a whole world of opportunities opened up. I wanted to create something on my own, something that went beyond the existing family set-up, and pushed the Manipal brand further,” says Ranjan.
Building on a family name
A kernel of an idea born in the US came to fruition in India through the Manipal Education and Medical Group. Today, it operates three major business lines: MaGe for education, Manipal Health Enterprises Pvt Ltd (MHEPL) for its hospitals and health care services, and Manipal Integrated Services (MIS), which offers facility management to educational institutions, hospitals and corporate houses. In 2006, he launched Stempeutics Research, a stem cell research company with a focus on regenerative medicine.
Incidentally, it was only after he laid the foundation of his business that he joined the board of the family trust, which operates institutes such as Manipal University in Mangalore and in Jaipur, Manipal Institute of Technology (Microsoft CEO Satya Nadella and Nokia CEO Rajeev Suri are graduates) in Karnataka.
Today, his education business (MaGe) accounts for a bulk of MEMG’s profits, and has established itself in the industry: It owns and operates universities in Malaysia, Antigua, Dubai and Nepal. In India, it offers higher educational, testing and assessment services and corporate and vocation training programmes.
That said, his health care business is also proving to be a sweet spot with investors. In a deal that is yet to be announced, MHEPL is raising $150 million from private equity firm TPG Capital. “We are waiting for the closing of the deal before announcing it,” says Ranjan. “Health will be a big area of growth for the next five years. A possible IPO in three-four years is on the anvil for the health care business.”
Typically, in the Indian life sciences and biotech startup ecosystem, an entrepreneur finds it difficult to attract funding during the teething stage. This is due to long gestation periods for projects, a high chance of failure at trial stages, competition from well-funded international companies and patent issues. Ranjan, however, has shrugged off these concerns. Aarin Capital invested Rs 10 crore in Vyome and Ranjan has made a similar investment in another of Sengupta’s ventures, Invictus Oncology.
(This story appears in the 16 October, 2014 issue of Forbes India. To visit our Archives, click here.)