CDC, the UK’s development finance institution and The Abraaj Group (Abraaj), a leading investor operating in growth markets, today announced their investment in Rainbow Hospitals, a 450-bed paediatric and maternity healthcare business based in Andhra Pradesh. This is CDC’s first direct equity investment in India since the launch of its new strategy in late 2012. The investment represents its sixth healthcare investment in the region.
Rainbow Hospitals is a large and specialised paediatric and maternity care company with four maternity, paediatric and neonatal intensive care units and one outpatient clinic in Hyderabad. The business has expanded with four centres added in the last six years.
Dr Ramesh Kancharla, Chairman and MD, Rainbow Hospitals said, “This investment lets us expand and develop our high-quality medical facilities, allowing us to replicate the successful pioneering model across the country, including in cities such as Bangalore,Chennai and Pune. In parallel, we would also like to develop tertiary paediatric care in tier two cities like Vizag and Kurnool. The current investment would give us the capacity to expand the number of beds available to patients from the current level of 450+ to close to a 1000 by 2017.”
Dr Kancharla added, “The patient investment approach taken by CDC and Abraaj gives us the space to focus on the longer-term business quality and performance essential in multi-speciality paediatric care.”
Srini Nagarajan, CDC’s Regional Director – South Asia said, “This is an exciting first direct equity investment in India for CDC. Rainbow is a company with great financial and development potential. We will work closely with the company to give them the long-term capital and support they need to build the business. With employment in the group currently at around 1,000 people, we expect this to grow as much as four times over the course of our investment, led by the rapid growth in the Indian healthcare market. With demand expected to grow at around 15 per cent per annum over the next decade it’s clear that the gap in provision of healthcare in India will need to be plugged by the private sector. We’ll help the business develop its plan to become a national centre of excellence for the teaching of paediatric medicine and for helping other institutions to deliver quality care – with a focus on lower income groups.”
Balaji Srinivas, MD, The Abraaj Group added, “The Abraaj Group have been early and committed investors in the healthcare space and this transaction represents our 28th investment globally. We are confident that our investment and support, alongside CDC, will facilitate Rainbow’s ongoing growth to help it reach its goal of becoming the leader in women’s and paediatric care.”
Under its new strategy, announced in September 2012, CDC now provides direct debt and equity investment to businesses in South Asia and Africa as well as continuing to act as a fund-of-funds investor. From 2004 – 2010 CDC operated primarily as a fund-of-funds investor, investing in companies through intermediary fund managers.
EH News Bureau
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