TPG sets up separate platform for healthcare investments in India
Mumbai: TPG Growth, an early backer of Uber Technologies Inc., has sharpened its focus on the Indian healthcare industry by establishing a new sector-specific platform for its investments, according to two people aware of the development.
Vishal Bali, a senior healthcare adviser to TPG Growth in Asia and a former group chief executive at Fortis Healthcare, has been named vice-chairman of the platform Asia Healthcare Holdings (AHH), one of the two people said on condition of anonymity.
AHH currently owns TPG Growth’s investments in Bengaluru-based Rhea Healthcare Pvt. Ltd, which operates a network of mother and child care centres in India under the “Motherhood” brand; and Cancer Treatment Services International (CTSI), a network of single-speciality facilities across India. After the buyouts, TPG had named new chief executives for its portfolio companies. Lloyd Nazareth, who has two decades of experience at Wockhardt Hospitals Ltd and Fortis hospitals Ltd, was hired as group CEO of CTSI, while Vijayarathna Venkatraman, a former zonal director at Fortis Healthcare, was named group CEO of Rhea Healthcare.
“TPG Growth also plans similar buyouts in the healthcare space and the assets will be held under the AHH platform,” said the person cited above. The proposed platform will help TPG to consolidate all its healthcare investment, which may see strong interest from a strategic buyer, who will get a diversified healthcare portfolio in India, he added.
The AHH team includes Bali, group chief financial officer Shobhit Agarwal, head of projects Rajesh Sivan, and Binu John, head of biomedical and supply chain.
A spokesperson for TPG Growth declined to comment.
TPG, formerly Texas Pacific Group, which has more than $73 billion of assets under management, is an active investor in the Indian healthcare sector. TPG Capital, the buyout arm of TPG Group, acquired about 25% in Manipal Health Enterprises Pvt. Ltd, one of India’s largest private hospital groups, in 2015 for Rs900 crore. TPG Growth also owns around 73% in Bengaluru-based surgical equipment maker Sutures India Pvt. Ltd.
TPG Growth is set to sell a 20% stake in Sutures India in a deal worth $100 million (about Rs650 crore), and hired investment bank Goldman Sachs Group Inc. to find a buyer, Mint reported last month.
“Healthcare is a capital intensive sector and some of the financial sponsors are therefore keen to back the management team, grow and build platforms,” said Pramod Kumar, managing director, Barclays Capital India.
“Greenfield hospitals take a long time to break even. Therefore there is a strong interest in buying existing assets and roll them into bigger platforms. Scale and brand are great enablers of talent attraction and retention and of course give them pricing power,” Kumar added.
India’s healthcare industry has seen major interest from global private equity funds given its growth potential as compared to other Asian markets. The healthcare delivery system in India will require an investment of around $245 billion over the next 20 years, according to a recent PwC report.
Last month, global investment firm KKR & Co. acquired a 49% stake in hospital chain Radiant Life Care Pvt. Ltd for $200 million.
In a first of its kind in India, ICICI Venture, India’s leading private equity fund, had launched I-Ven Medicare India Pvt. Ltd, a $250-million special funding vehicle aimed at investing in hospitals, also part of India Advantage Fund Series 2 in 2008.
Venture capital and private equity investors’ interest in healthcare sector in India got heightened in the past five years, with transaction value increasing from $94 million (2011) to $1.2 billion (2016) – a jump of over 13.5 times, added the PwC report. According to the PwC report, India needs to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years.