Private equity deal size for healthcare in the first half of the year has risen more than three times over last year.
The average ticket size has increased from $9.41 million in first half of 2011. to $31 million in H1 CY-2012. According to Venture Intelligence, 26 deals worth $807 million were done in H1-2012 as against 22 deals worth $207 million.
In addition to hospitals PE firms have funded healthcare channels as well. For instance, IFC and NYLIM India’s have invested in Super Religare Laboratories.
Deal advisors say that the healthcare sector has matured enough for PE players to give a ‘thumbs up’ for funding growth.
“I am quite upbeat about the healthcare sector. This is a consumer-driven sector and spending cannot be withdrawn in this. Private equity investments in consumer space will only increase because India’s consumer story is still intact,” said Mr Sanjeev Krishan, Executive Director, Private Equity/ M & A, PwC.
One of the top deals this year was Advent International’s $110 million investment in CARE Hospitals. Other large deals were Olympus Capital’s $100 million investment in DM Healthcare and GIC’s $100 million investment in Vasan Eye Care in March.
Attracting inflows
“Health and education are attracting inflows as the population is rising. Many of these hospitals have good business models. Earlier, healthcare was not very organised and, therefore, returns were not very good.
Peripheral diagnostic centres have also received much investment as corporatisation is taking place,” said Mr Prithvi Haldea, Chairman and MD, Prime Database.
Analysts also say that the healthcare is one such sector where investments come in from funds with various themes apart from consumer focussed funds. “Investments in this sector also come from infrastructure funds. Hospitals/ clinics can be categorised under social infrastructure,” said Mr Krishan. Funds typically exit after three to seven years depending on what stage the business is in.