In fact, savvy PE players who latched on the sector very early in its growth cycle have seen valuations almost double in the past five years. For example, Singapore-based healthcare focused PE firm, Quadria Capital is reportedly set to buy ICICI Venture’s 67 per cent in Kolkata-based Medica Synergie. As per media reports, the deal is worth Rs 160 crores, almost double the Rs 90 crores that ICICI Venture paid in 2007 when it acquired stakes. If this deal goes through, it will be one of the biggest in the sector and could be a rain-maker of sorts.
Quadria has already invested in the Indian healthcare assets when it bought out Milestone Religare’s portfolio which included cancer clinic chain Healthcare Global Enterprises and KIMS, a multispeciality hospital. In fact its website spells out the obvious. Asia’s GDP is growing at eight per cent annually, compared to OECD growth rate of two per cent, making for robust fundamentals. This has created a predictable, defensible, yet fast growth investment environment and many players like Quadria are bound to invest more heavily in the future as well.
Many more such deals were struck in the past year: Kids Clinic ($16 million from Sequoia Capital), Ivy Health and Life Science ($12 million from DEG) and Fortis Healthcare ($100 million from IFC). It is good news that many gaps in India’s healthcare delivery chain are being financed by such deals. As PE players are known to track their investments with an eagle’s eye, we hope that along with finance they infuse sound management principles and corporate governance practices as well.
And indeed, this would be an idea whose time has most definitely come. Most PE investors insist on a fair amount of hand-holding to help start ups evolve to the next level. Primary healthcare chain, Wellspring Healthcare was one of the first to attract such funding and even though their basic idea seemed quite outdated at the time (rejuvenation of the idea of a family doctor), their business model and clinical procedures have stood the test of time. The same will happen for newer start ups like Pune-based MyDentist which aims to set up a chain of dental care clinics.
But success always starts with a blueprint, a sound infrastructure which can stand up to due diligence. And much of this infrastructure lies in the physical set up of hospitals. Today, hospital infrastructure is a booming business yet fraught with many challenges. Still the projected growth and returns of this sector are too promising; besides the fact of course, that we as a nation, will need to put in place a system to meet the healthcare needs of our population.
With PE and other sources of funding entering the sector, we hope that the urge to cut corners will reduce because this has been a major tripping point in the past.
In fact, this is the theme of the conference at the upcoming Hospital Build & Infrastructure India Expo (HBI): ‘Healthcare systems design/operations for ensuring patient’s safety disaster mitigation and quality care’. Going with the theme, this issue of Express Healthcare has a special hospital infrastructure segment, with industry experts giving their views on the best practices to balance cost with quality without compromising patient safety. Here’s hoping that the event gets this message out to as many stakeholders as possible.
Viveka Roychowdhury
Editor