Mumbai: Private equity firm General Atlantic LLC (GA) has emerged as the frontrunner for investing nearly $110 million (around 680 crore) in lieu of a minority stake in healthcare technology services and solutions provider CitiusTech Inc., according to two people, who did not wish to be identified.

CitiusTech, which won the Red Herring technology award in 2011, had hired the investment banking arm of Citigroup Inc. in India for the transaction. “PE firms TA Associates and Warburg Pincus were also in the race for the transaction, though GA seems to be leading right now," said one of the two people cited above, adding that the deal is expected to close over the next one week.

CitiusTech plans to sell up to 25% to PE investors as it seeks to raise capital to fund its growth in Europe and Middle East, The Economic Times had first reported in January.

CitiusTech was co-founded in 2005 by Rizwan Koita and Jagdish Moorjani and offers a wide range of healthcare technology services including healthcare software development, healthcare interoperability, business intelligence and analytics, among others. On 20 February, CitiusTech said it posted a 51% growth in its revenue in 2013. No further details of the company’s financials were disclosed.

A mail sent to CitiusTech’s spokesperson did not elicit any response. Mails sent to TA Associates and Warburg Pincus also remained unanswered. GA declined to comment. Citigroup could not be immediately reached for comment.

CitiusTech has more than 1,400 employees and has offices in Mumbai, Princeton, Canada and Singapore, among others.

The healthcare market in India is estimated to be $78 billion and has been growing at an annual pace of 11% on average from 2008 through 2012, according to Bain and Co.’s India Private Equity Report 2013, released in May. It is expected to grow 20%, as India tries to catch up with other developing nations.

According to the World Bank’s 2010 estimates, India’s per capita spending on healthcare was $50, trailing China’s $221, and far below levels seen in the West, where the UK spends $3,500 and the US spends $8,400 per capita. According to IT market research and advisory firm Springboard Research’s estimates, healthcare IT spending in India is estimated to have more than doubled from $274.2 million in 2009 to $609.5 million in 2013.

Investments in the healthcare IT segment in the country are dominated by small investments. In 2013, there were four such transactions worth $1.9 million, compared with three such deals worth $6.2 million in 2012, according to VCCEdge estimates, which tracks investment activity in the country.

Bimlesh Gundurao, chief executive of Aguai Solutions Pvt. Ltd, an IT consulting firm focused on healthcare, said over the last few years, Indian healthcare firms have increasingly started adopting IT as a strategic initiative. “Over the last 3-5 years, large healthcare firms have started creating functions like chief information officer, who strategize on spending on information usage," he said.

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