The Indian healthcare industry has attracted substantial private equity investments of over Rs 27,000 crore in recent years, with notable deals involving Manipal Hospitals, Sahyadri Hospitals, and ASG Eye Hospital. The sector's growth is driven by expanding facilities, mergers, and acquisitions, especially in response to post-Covid consolidation, resulting in higher quality healthcare preferences and improved revenue projections. These trends are backed by strong demand for healthcare services, with ICRA predicting a healthy revenue growth of 8-10% in FY24, further cementing the industry's positive trajectory.
The Indian healthcare industry is currently experiencing a surge in private equity investments, as indicated by recent deals amounting to over Rs 27,000 crore within the past two years, as reported by ICRA, a prominent rating agency. Notable transactions involve Manipal Hospitals, Sahyadri Hospitals, ASG Eye Hospital, and Maxivision Eye Hospital, among others. These investments signify a substantial boost to the sector, with specific focus on Manipal Health, where Temasek has invested a staggering Rs 16,400 crore to secure a majority stake.
Of particular interest within the private equity landscape is the eyecare segment, which has attracted significant attention from investors. Remarkably, a substantial Rs 4,000 crore has been directed into these healthcare facilities within the recent months alone. In this context, ASG Hospital witnessed investments of Rs 1,500 crore from General Atlantic and Kedara, while Maxivision Eye Hospital received Rs 1,300 crore from Quadria Capital. Additionally, Dr. Agarwal’s Healthcare also secured Rs 1,050 crore in investments.
Kedara Capital made a notable move by acquiring Olivia skin and hair clinic from Sreyas Holistic Remedies for a substantial sum of $65 million (equivalent to Rs 540 crore). Further diversifying the investment landscape, Mumbai Oncocare Centre, a chain of cancer daycare centers and a unit of Cellcure Cancer Centre, successfully raised $10 million (about Rs 83 crore) through Series A funding, facilitated by Tata Capital Healthcare Fund.
The momentum of private equity participation also triggered several exits by existing players, yielding significant returns. A prominent example is the exit of Everstone Group from Sahyadri Hospitals, which paved the way for the Ontario Teachers’ Pension Plan Board (Ontario Teachers’) to step in as new investors. The Ontario Teachers' investment amounted to around Rs 2,500-2,700 crore, enabling them to secure a majority stake in Sahyadri Hospitals, the largest hospital chain in Maharashtra. Notably, Ontario Teachers' has also committed an additional investment of Rs 750 crore into the Sahyadri Hospitals chain.
The ongoing trend of post-Covid consolidation in the Indian healthcare sector has been shaped by a growing patient preference for higher-quality healthcare services. This shift has triggered numerous standalone hospitals to actively seek integration into larger hospital networks, thus fostering industry consolidation. Manipal Hospitals, for instance, capitalized on this trend by acquiring Columbia Asia Hospital and Vikram Hospital during the pandemic period.
ICRA, a reliable source of industry insights, projects that the Indian hospital sector is in robust health, projecting a healthy revenue growth of 8-10% for FY24. Moreover, the anticipated operating profit margin is estimated to fall within the range of 22-23%.
In line with this optimistic outlook, ICRA's analysis reveals that leading healthcare companies have unveiled ambitious expansion plans. Over the next four years, these firms are poised to add more than 8,400 beds and execute extensive upgradation and refurbishment initiatives, which collectively represent a remarkable 26% increase in capacity compared to levels recorded in March 2023. Encouragingly, the industry's focus on inorganic growth opportunities through mergers and acquisitions could potentially contribute to further incremental bed additions.
ICRA's comprehensive assessment anticipates strong aggregate occupancy rates of 63-65% for FY2024. This prediction is underpinned by factors such as the rising prevalence of non-communicable lifestyle diseases, increasing per capita expenditure on healthcare, heightened awareness levels, expanding health insurance coverage, and a surge in medical tourism volumes. As the Indian healthcare sector continues its upward trajectory, driven by these multifaceted growth drivers, the industry appears poised for sustained expansion and evolution.
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