Healthcare services is more of a local play, hence it is not surprising to see strong interest from PE funds and domestic players in the sector, Goldberg said. In the recent past, the hospital sector in India has seen a consolidation, largely driven by global private equity funds.
Recently, Blackstone-owned Quality Care India (QCIL) became the third largest hospital group in India, after making multiple acquisitions. Another PE fund, TPG Growth, owns a 25% stake in QCIL. Rothschild had advised TPG on its majority stake sale in QCIL to Blackstone in 2023.
India’s healthcare sector faces significant challenges, including a shortage of hospital beds and doctors. According to a 2020 Human Development Report, India ranked 155th in bed availability, with just five beds and 8.6 doctors per 10,000 people, indicating the growth potential in the sector.
“Notwithstanding the amount of activity that we’ve seen over the last five to six years, there continues to be a fairly high level of fragmentation in the healthcare space,” said Subhakanta Bal, managing director, Rothschild & Co India.The top 10 corporate healthcare chains in India on the private side would still probably account for less than 3-4% of total hospital beds in India, he said, terming the industry as “super fragmented”. While large chains are organically growing faster than the sector, there is still a very large runway for inorganic growth, Bal said.”Some of the local smaller assets are not necessarily getting growth capital and over time there is a natural shift towards larger chains. I think that’s less to do with lack of interest from investors outside of metros; it’s more to do with the fact that there is an organic sort of consolidation that’s happening,” he said.
In July 2024, global fund KKR & Co made a comeback into the hospital industry with its ₹2,500-crore acquisition of a 70% stake in Kerala’s Baby Memorial Hospital (BMH), two years after its exit with a fivefold return from Max Healthcare. Leveraging the BMH brand, KKR plans to acquire more hospitals of 500-1,000 beds in various cities, preferably in South India and other contiguous markets and build out a platform. In October 2023, QCIL acquired an about 85% stake in another Kerala-based hospital chain, KIMS Health.
Meanwhile, Manipal Hospitals, the second largest hospital chain in India, has taken the total number of beds to about 10,000 through multiple buyouts in the last couple of years. In September 2023, Manipal added about 1,200 beds through its acquisition of Kolkata’s AMRI Hospitals, expanding its presence in Eastern India. In 2020, it acquired the Indian assets of Columbia Asia Hospital for ₹2,100 crore and, in June 2021, it bought out Bengaluru-based Vikram Hospital. Currently, Singapore government-owned fund Temasek Holdings owns about 51% in Manipal Health, while Abu Dhabi’s Mubadala Investment holds 8% and TPG Growth has 11%. A 30% stake is with promoter Ranjan Pai and family.
“We see as a natural evolution where over time smaller chains either join hands or get absorbed right by the larger chains right to up their delivery standards, improve quality and compliance or some. The phenomena where you know some of the smaller assets are probably going to struggle to keep pace with the larger assets in terms of growth,” Bal said.
