TPG invests Rs150 cr in Sutures India2 min read . Updated: 11 Sep 2013, 11:48 PM IST
TPG Growth plans to introduce new products through Sutures India
Mumbai: Private equity (PE) firm TPG Growth has acquired a minority stake in Bangalore-based surgical equipment maker Sutures India Pvt. Ltd for ₹ 150 crore, said Vish Narain, country head of TPG Growth India.
TPG Growth’s immediate plan, according to Narain, is to help Sutures introduce new products including special orthopedic implants, plastic casts and surgical instruments. Sutures manufactures medical products like absorbable and non-absorbable sutures, eyeless needles, surgical meshes and disposable surgical gloves.
“Hospitals need hundreds of products," said Narain, adding, “Sutures offers only five, so there is huge opportunity to scale. There are hundreds of small companies that offer these products individually. Sutures has the opportunity to be the largest player in this space."
TPG Growth, said Narain, will make bring more companies under Sutures and make it a large company in the devices space. “We want to create another holding company in the healthcare space for hospitals. We want to invest in a mid-size hospital chain and scale it. We need an asset for that and we are trying to find such an asset," he said.
Since 2009, when it started investing in India, TPG Growth has closed five transactions worth over $300 million, said Narain.
TPG Growth’s success in deal-making come at a time when PE transactions are falling due to dampened economic sentiments and investors shying away from committing capital due to lack of returns.
From 1 January till 11 September, there have been 446 venture capital (VC) and PE deals worth $7,855 million, compared with 520 deals worth $7537 million in the same period a year ago, according to VCCEdge, an investment tracker.
This is the 48th healthcare investment this year. In July, Renuka Ramnath’s Multiples Alternate Asset Management Pvt. Ltd acquired a controlling stake in Mysore-based hospital chain Vikram Hospital for about ₹ 180-190 crore. Experts say healthcare is a recession-proof field, with growth predicted at more than 15% as infrastructure and insurance penetration rates improve. Lack of such services in the country makes it further attractive to investors.
For those interested in healthcare, they can either invest in a hospital chain—a capital-intensive business since a single bed needs ₹ 20-60 lakh investment, or in a capital-efficient model like devices or ancillaries in the healthcare space.
Sunil Jain, founder partner at Sprout Capital Advisors LLP, an investment bank, said while the growth theme of healthcare is strong, finding and retaining a management team that can execute plans is a challenge.
“These businesses need a team that will back the execution plans and that is something an investor needs to be careful about," Jain said.