PE's Health Care Lab

How private equity is fuelling the transformation of health care in India, while enhancing governance and accountability

- By NAINI THAKER

Dr BS Ajaikumar, when he was a practising oncologist in the United States, set up a not-for-profit cancer hospital in Mysuru in 1989. Fourteen years later, he moved to India with his family to start Healthcare Global Enterprises (HCG), which had a hub-and-spoke model for cancer care in India with the hub being in Bengaluru. HCG picked up pace when private equity (PE) began to flow into it, beginning with ₹50 crore from IDFC Private Equity in 2006. Three PE deals took place between 2006 and 2008, and one each in 2010 and 2013.

A big one came in June 2020, as the Covid-19 pandemic took a grip over the country, when CVC Capital Partners invested ₹1,049 crore for a shade above 60 percent equity. And this year, KKR paid ₹3,200 crore for a 51.5 percent stake.

Along the way, HCG has become a veritable lab for PE's experiments with Indian health care. And what an experiment it is turning out to be.

“It is the PE money that is fuelling the growth of health care in India. Otherwise, hospital chains like HCG would not have seen the kind of scale that it has today,” says Ajaikumar, founder & chairman, HCG.

Indeed, global PE firms Blackstone, Temasek, TPG, General Atlantic, KKR and others are pouring billions into hospital chains in India, upending the established hierarchy. The most recent deal is Manipal Hospitals' acquisition of Sahyadri Hospitals from Ontario Teachers' Pension Plan in July. Valued at approximately ₹6,000 crore, this adds 11 hospitals across Maharashtra and brings Manipal's total bed count to 12,000.

Manipal now leads the pack in terms of bed capacity, surpassing Apollo Hospitals, which has more than 10,000 beds across 73 hospitals.

Earlier, in April 2023, Temasek Holdings acquired a 59 percent stake in Manipal Health Enterprises for $2 billion, becoming its majority shareholder. The deal involved buying out stakes from the existing investors, including TPG and National Infrastructure Investment Fund (NIIF).