General Atlantic, which is shaking off its technology and export focus in India, is holding discussions to buy $100 million, or Rs 450 crore, stake in DM Healthcare spearheaded by Dubai-based medical entrepreneur Dr Azad Moopen.
Jardine Rothschild Asia Capital, a private equity joint venture between Jardines and the Rothschilds, is in the fray for $50 million, or around Rs 200 crore, investment in Hyderabad-based Quality Care, which operates a network of 12 hospital under the Care brand.These transactions are part of the ambitious growth capital raising by emerging healthcare networks. Care Hospital-in which the big bull Rakesh Jhunjhunwala and serial entrepreneur and Matrix Labs founder N Prasad are investors-plans to raise Rs 350 crore in equity and debt for doubling beds from 1,700 to 3,200. DM Healthcare is looking at over Rs 600 crore fund-raise to ramp up fast even through acquisitions.
The two deals are still in the making. General Atlantic Partners spokesperson declined to comment, while an email to Dr Moopen's office remained unanswered. An email to a top Jardine Rothschild official too did not elicit any response. Top officials of Care Hospital said discussions were on with multiple new investors but declined to elaborate citing confidentiality clauses.
FMCG major Emami and Kolkata-based developer Srachi have looked at tapping private equity to expand their joint venture AMRI Hospitals, while cancer specialty chain Healthcare Global (HCG), based in
Bangalore, are running a process to raise $50 million in growth capital and also provide profitable exit to some of its investors, including IDFC. Rating agency Fitch, while predicting robust double-digit growth for Indian healthcare, said the industry could touch $100 billion by 2015. DM Healthcare's deal making with General Atlantic could rank among the top PE deals in healthcare, and would see the entry of another bulge-bracket private investor into the sector. General Atlantic's global peers Apax Partners ($104 million in Apollo Hospitals) and Warburg Pincus($85 million Metropolis Laboratories) have already checked into India's growing but challenging industry.UK-based mid-tier fund for emerging markets Actis made an early investment in Ahmedabad-based Sterling Hospitals, while a string of smaller private equity investors, including Milestone Religare, Spring Healthcare, IVEN Medicare and Evolvence, have made investments in standalone hospitals. The growing interest of the big private equity could unleash growth leaders and bring about a faster consolidation in a notoriously fragmented industry.
General Atlantic's deal with DM Healthcare will be a combination of primary and secondary transaction. It is likely to buyout the existing investor
India Value Fund Advisors, besides pumping in fresh capital. The backing of an investor like General Atlantic would bolster DM's plans to pursue inorganic growth, as it has been on the prowl for medium-sized hospitals.Ace investor Jhunjhunwala is expected to retain his 14% stake, while Prasad may dilute his 18% stake in Care, which had appointed NM Rothschild as investment banker to raise funds.
Source: Times of India