Private equity funds are increasing their investments in Indian healthcare space despite the global credit crunch and turmoil in the stock markets, according to a study.
Funds such as ICICI Ventures, IFC, Ashmore and Apax Partners have invested about $450 million (about Rs 2,250 crore) in the first six months of the current financial year compared with $125 million (approximately Rs 675 crore) in the same period a year ago, said an analysis carried out by Feedback Ventures. The rise in investments is over three fold, the infrastructure consultancy said.
Additionally, the average deal size in the healthcare sector has doubled to $20 million in the period compared with $10 million a year earlier, the analysis showed.
| INJECTING MONEY | ||
| Company | Investor | Investments (in $ million) |
| Vikram Hospitals | ICICI Ventures | 24 |
| RG Stone | ICICI Ventures | 10.25 |
| Rockland Hospitals | IFC | 14 |
| Quality Care India | Ashmore UK | 23 |
| Healthcare Global Enterprises | PremjiInvest, Enterprises Evolvence, IDFC | 31 |
| Source: Feedback Ventures | ||
According to Monika Sood, president (infrastructure advisory division), Feedback Ventures, continuing flow of investments into the healthcare sector is an indication of its recession-proof nature. "Demand-supply gap and possibilities of attractive financial returns make the healthcare sector attractive for PE funds," she said.
Habil Khorakiwala, chairman of Wockhardt Hospitals, agrees on the "recession-proof nature" of the healthcare sector. His group is investing Rs 1,000 crore to increase the cumulative bed strength of the hospital chain to 4,000. Currently, Wockhardt has 15 hospitals with a combined bed capacity of about 1,500. Wockhardt is in talks with PE firms to fund its expansion plans.
Feedback Ventures expects PE funds to invest at least $1 billion in the healthcare sector in the next five years.
''Operating profit margin of 20-25 per cent is achievable in the Indian healthcare sector,‘’ Sood added.