Mumbai: American private equity (PE) fund Warburg Pincus Llc. is in the final stage of negotiations to acquire a minority stake in leading fertility hospital chain Indira IVF Hospital Pvt. Ltd, two people close to the development said.

Indira IVF will sell about a 20% stake for Rs700 crore, the first of the two people said, which would value the company at Rs3,500 crore. This is the first time the fertility chain is raising private equity funds. Both people spoke on condition of anonymity.

In February, Mint reported that three leading US-based PE funds—Carlyle Group, Warburg Pincus and TPG Growth— were in separate discussions to buy a minority stake in Indira IVF. According to the report, Indira IVF was looking at a valuation of $600-800 million (Rs4,000-5,300 crore), and the promoters could dilute their stake by 10-20%.

However, other PE funds uncomfortable with that valuation backed out and it has been reduced to $550-600 million and Warburg is the only one left, the person cited above said.

Indira IVF, founded by Ajay Murdia in 1988 in Udaipur, currently has 18 centres across India in cities such as Jaipur, Indore, Nasik, Delhi, Kolkata, Pune, Ahmedabad and Agra. Indira IVF plans to use the proceeds of the share sale to expand its presence to more cities in India, the second person said.

Mails sent to Warburg Pincus spokesperson and Ashish Lodha, director finance at Indira IVF, were not answered.

Indira IVF’s rivals include Mumbai-based Bloom Fertility Centre, Bengaluru-based Milann, Mumbai-based Morpheus IVF, Nova IVI Fertility, New Delhi-based Ridge IVF and Jaipur-based Shivani Fertility and Mother Care.

About 75% of the in-vitro fertilization (IVF) market in India is captured by the top 500 clinics, comprising a few corporate chains and leading private clinics, while the rest are held by unorganized players, according to a 2015 report by advisory firm EY.

In-vitro fertilization cycles or the number of IVF processes in India are estimated to rise from an estimated 100,000 in 2015 to 260,000 by 2020, driven by an increase in the number of infertile couples seeking treatment, said the report, Call for Action: Expanding IVF treatment in India.

Nearly 10-15% of married couples in India are unable to conceive by natural means and nearly 27.5 million couples who are actively seeking children suffer from infertility, according to the EY report. By 2020, an increase in the proportion of women in the reproductive age (20-44 years), coupled with a skew towards those aged between 30-44 years, is likely to result in an increase in infertility prevalence, the EY report said.

In order to tap the opportunity, global financial firms remain keen on investments in Indian infertility market.

Japanese financial services firm Orix Corp. is in talks to buy a minority stake in Bengaluru-based fertility clinic chain Nova IVI Fertility, from existing investors Goldman Sachs Group Inc. and New Enterprise Associates (NEA), Mint reported on 12 February. Nova has 11 fertility clinics across eight cities in India and one in West Asia.

In October last year, India Life Sciences Fund II invested $6.2 million (Rs40 crore) in Oasis Centre for Reproductive Medicine, a Hyderabad-based IVF chain.

In India, Warburg has an exposure to healthcare sector through its investment in active pharmaceutical ingredients (APIs) maker Laurus Labs Ltd. Warburg Pincus invested Rs550 crore in Laurus Labs in 2014 and holds a 30.41% stake.

Warburg’s large India investments include Tata Technologies ($360 million), ICICI Lombard General Insurance ($283 million), Kalyan Jewellers India Ltd ($260 million), multiplex chain PVR Ltd ($120 million) and logistics firms Ecom Express Pvt. Ltd, apart from Rivigo Services Pvt. Ltd, Stellar Value Chain Solutions Pvt. Ltd, NBFCs such as AU Financers (India) Ltd and Capital First Ltd.

Warburg Pincus, which has an exposure of more than $60 billion in more than 780 companies, has invested about $4 billion in India till date.

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