BackTPG in talks for a stake in Mumbai’s maternity chain Surya
US-based private equity firm may buy a 25-30% stake in clinic chain for about Rs80-100 crore
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US-based private equity firm TPG Growth is in early stages of a discussion to acquire a minority stake in Mumbai-based maternity clinic chain Surya Mother & Child Care Super Speciality Hospital, according to two people close to the development.
TPG plans to acquire 25-30% stake for about ₹ 80-100 crore, said one of the two people, on condition of anonymity.
Chennai-based mid-market investment bank Spark Capital Advisors India Pvt. Ltd is advising the promoters on the stake sale.
Surya, started in 1985 by Dr B.S. Avasthi, a well known pediatrician working in the field of neonatology and child care, runs two hospitals—a 70-bed hospital in the western suburbs of Mumbai and a 110-bed hospital in Pune.
An e-mail sent to Dr Avasthi on Tuesday did not elicit any response while spokespersons at TPG Growth and Spark Capital declined to comment.
Funds from the stake sale will be used by the promoters to expand into Mumbai’s suburbs and across Maharashtra, said the second person cited above, who also did not want to identified.
In July, TPG Growth acquired Bengaluru-based Rhea Healthcare Pvt. Ltd. (RHL), which operates a network of mother and child care centres in India under the Motherhood brand. TPG acquired controlling stake from Rhea Healthcare’s promoters, including actor Mammootty and his son Dulquer Salmaan, for $33 million.
Private equity investors have deployed more than ₹ 600 crore in Indian maternity clinics in the last eight months.
“From being a largely fragmented and unorganized space, maternity and child care segment has seen a spurt of regional organized players. Until a few years back, maternity and child care services formed the mainstay of 10-20 bedded nursing homes for a large population while patients with deep pockets flocked large hospitals for higher standards of patient care and superior infrastructure. However, this trend started changing with a shift in demographics, creating both disruption and opportunity for organized players specializing in maternity and child care," said Gaurav Marathe, managing director, Lincoln International Advisors Pvt. Ltd, global mid-market investment bank.
Two South Indian maternity chains have received private equity funding for expanding their business to new territories in the last couple of years.
Last December, India-focused private equity fund India Value Fund Advisors (IVFA) acquired a minority stake in Bengaluru-based Kids Clinic India Pvt. Ltd, which runs maternity and infant care under the brand Cloudnine, for ₹ 400 crore. Cloudnine already has investments from Matrix Partners India and Sequoia India.
With the funding, Cloudnine is setting up 12-15 hospitals in western India, the National Capital Region and south India. Cloudnine has 10 hospitals and five clinics across Bengaluru, Chennai, Gurgaon, Mumbai and Pune.
Leading Hyderabad-based child and maternity care chain Rainbow Children’s Medicare Pvt. Ltd received private equity funding in 2013. It currently runs four hospitals in Hyderabad and one each in Bengaluru and Vijayawada. Rainbow got ₹ 100 crore in funding from UK-based development finance institution CDC Group Plc. and Dubai-based Abraaj Group in 2013.
“Large scale of migration to Tier I cities means that such people do not have a family doctor at their current location. Moreover, affordability is significantly higher as a large portion of such people has a higher average pay and medical insurance. This target group is also looking for specialized players with higher quality of patient care and infrastructure at par with global standards," added Marathe.
In India, where maternal mortality is high, such specialised chains with experienced gynaecologists and staff are preferred by many middle class families.
At 140 deaths of mothers per 100,000 live births, India is a long way from achieving the UN millennium development goal of reducing the maternal mortality ratio (MMR) to 109 this year.
India’s maternal mortality rate fell from 212 deaths per 100,000 live births in 2007 to 178 deaths in 2012, as per Unicef India figures. Globally, about 800 women die every day of preventable causes related to pregnancy and childbirth while 20% of these women are from India.
Each year in India, there are 1.34 million deaths of children aged five and below, 1.05 million infant deaths and 0.748 million newborn deaths. According to Unicef India, the country accounts for more than a quarter (26%) of the world’s neonatal deaths.
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