The Indian hospital industry has seen a ramp-up in private equity investments with deals worth over Rs 27,000 crore in the last two years, rating agency ICRA said.
Investments in Manipal Hospitals, Sahyadri Hospitals, and ASG Eye Hospital, Maxivision Eye Hospital are the leading deals. Temasek invested Rs 16,400 crore to acquire a majority stake in Manipal Health. The eyecare segment has generated interest among PE investors as nearly Rs 4,000 crore going into these hospitals in the last couple of months). ASG Hospital saw General Atlantic and Kedara investing Rs 1,500 crore, Maxivision Eye Hospital (Rs 1,300 crore from Quadria Capital) and Dr Agarwal’s Healthcare (Rs 1,050 crore).
Kedara Capital acquired Sreyas Holistic Remedies’ Olivia skin and hair clinic for $ 65 million (Rs 540 crore). Mumbai Oncocare Centre, a chain of cancer daycare centres and a unit of Cellcure Cancer Centre raised $ 10 million (Rs 83 crore) in Series A funding from Tata Capital Healthcare Fund.
There have also been exits by existing PE players with significant returns. Everstone Group exited from Sahyadri Hospitals with the Ontario Teachers’ Pension Plan Board (Ontario Teachers’) coming in as investors. Ontario Teachers invested around Rs 2,500-RS 2,700 crore to acquire a majority stake in Sahyadri, the largest hospital chain in Maharashtra. Ontario Teachers would invest another Rs 750 crore in the Sahyadri Hospitals chain.
There has been a post-Covid consolidation in the Indian healthcare sector with a patient preference for better quality healthcare. In an earlier interaction, Dilip Jose, managing director and CEO, Manipal Hospitals, had said people were migrating from smaller nursing homes to larger hospitals. Many standalone hospitals were looking to be part of larger hospital networks and scouting for buyers leading to consolidation in the industry, Jose said. Manipal acquired Columbia Asia Hospital and Vikram Hospital during the pandemic.
According to ICRA, the Indian hospital industry has seen sustained healthy demand for healthcare services and continued market share gains for organised players. The Indian hospital industry is in the pink of health with healthy revenue growth of 8-10% expected in FY24 with operating profit margin expected to be at around 22-23%. Mythri Macherla, assistant vice president & sector head, ICRA said expansion in the hospital industry was supported by sustained improvement in demand. “ICRA’s sample set companies have announced sizeable expansion plans with the addition of over 8,400 beds and an upgradation/refurbishment plan over the next four years.
This translates to over 26% increase in capacity vis-à-vis March 2023 levels. Some large companies in the industry continue to scout for inorganic growth opportunities, which could translate into incremental beds being added through mergers and acquisitions,” Macherla said.
ICRA estimated aggregate occupancy to be strong at 63-65% for FY2024 with average revenue per bed expected to grow by 5-7%. This was driven by the rising incidence of non-communicable lifestyle diseases, growing per capita spending on healthcare and awareness levels, increasing penetration of health insurance and higher medical tourism volumes.