Mumbai: It’s not just anxious relatives who crowd maternity hospitals anymore. India-focused private equity (PE) funds too are rushing in—to take a pie of the fast-growing maternal healthcare segment. More than 600 crore has been deployed in Indian maternity clinics in the last eight months by private equity investors, as per figures.

Women’s desire to have a pleasant experience during the delivery period, away from the hospitals which are typically crowded, has increased the demand for exclusive maternity clinics in India.

“The journey of giving birth is fundamentally a happy experience. A specialised mother and child centre gives the mother (and the family) a personalised and joyous experience, complete with balloons, chocolates and flowers as well as a high standard of care," said Vish Narain, partner at US-based private equity TPG Growth in India.

Last week, TPG acquired Bangalore-based Rhea Healthcare Pvt. Ltd. (RHL), which operates a network of mother and child care centres in India under the Motherhood brand. TPG acquired the controlling stake from Rhea Healthcare promoters, including noted film actor Mammootty and his son Dulquer Salmaan, for $33 million.

Motherhood has built a network that offers neonatal intensive care units, and a team of experienced gynecologists, neonatologists and pediatricians.

“As the middle class grows, we’ve found that women are increasingly looking for more personalized and quality care, including medical specialists and facilities equipped specifically for giving birth and caring for babies. That demand is met with a general lack of supply. This creates an opportunity for investors," said Narain.

Last December, another Bengaluru-based maternity and infant care chain, Cloudnine Hospitals, received 400 crore investment from private equity fund India Value Fund Advisors (IVFA) for a minority stake. Cloudnine already has investments from Matrix Partners India and Sequoia India.

Cloudnine said it plans to use the money to set up 12-15 hospitals in western India, the national capital region and south India, in addition to investment in technology. Started in 2007 from a single hospital in south Bengaluru, Cloudnine has expanded its operations to 10 hospitals and five clinics across Bengaluru, Chennai, Gurgaon, Mumbai and Pune.

“Single specialty hospitals, especially maternity & paediatrics centres, tend to be asset light, achieve operational efficiencies faster and thus have a lower gestation period. These are also easily replicable and scalable across geographies. The ability to charge a premium on the pricing compared to the multi-specialty hospitals translates into higher margins and return on capital," said Rana Mehta, partner and leader—healthcare, PwC India.

As demand is increasing, the size of these niche hospitals is also increasing.

Rainbow Children’s Medicare Pvt. Ltd, South India’s leading specialized child and maternity care chain, plans to add 500 more beds across three new hospitals in the next two years, spending 250 crore, Mint reported in September.

Rainbow currently runs four hospitals in Hyderabad and one each in Bengaluru and Vijayawada.

Rainbow is setting up a 100-bed hospital in Bengaluru, which is expected to begin operations by the end of this year. Two 160-bed hospitals each in Chennai and Visakhapatnam are expected to be ready in 20-24 months. It will also expand capacity at its Hyderabad hospital. The expansions will take the total bed capacity of Rainbow Hospitals from 725 to around 1,200 beds in the next two years.

The Hyderabad-based Rainbow got funding worth 100 crore from UK-based development finance institution CDC Group Plc. and Dubai-based private equity firm Abraaj group in 2013.

“These centres are roughly half the cost of a multi-specialty hospital and can be built within a year (takes 3-5 years for a multi-specialty hospital), so the unit economics are superior," added Narain.

Availability of experienced gynecologists and pediatricians makes these centres more attractive for women in India, where maternal mortality is still high.

At 140 deaths of mothers per 100,000 live births, India is far from achieving the UN millennium development goal of reducing the maternal mortality ratio (MMR) to 109 this year. This is despite the government rolling out programmes such as the Janani Suraksha Yojana (JSY), one of the world’s largest conditional cash transfer schemes.

India’s maternal mortality rate fell from 212 deaths per 100,000 live births in 2007 to 178 deaths in 2012, according to Unicef India. Globally, about 800 women die every day of preventable causes related to pregnancy and childbirth while 20% of these women are from India.

Similarly, the rate of neonatal deaths is high in India. Each year in India, there are 1.34 million deaths of children aged under five, 1.05 million infant deaths and 0.748 million newborn deaths. The country accounts for more than a quarter (26%) of the world’s neonatal deaths, said Unicef India.

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