Indian hospitals set investors’ pulses racing in post-COVID boom

PUNE (Reuters): In Pune city, Indira IVF is teeming with patients ready to spend $1,300 on fertility treatments that few government hospitals offer, reflecting the huge demand for private health care sweeping India, fuelled partly by the scary pandemic experience.

Spotting the trend, global investors are scouting the Indian market, and banking and industry sources counted at least nine healthcare chains that are currently in talks to sell stakes.

The economic and demographic changes underway in India led global consultancy PwC to forecast 12-14 per cent annual growth for a private healthcare market currently worth around $48 billion.

“We are seeing more heightened activity than ever before,” said Rana Mehta, who leads PwC’s India’s healthcare practice, adding that he is currently working with more than a dozen private equity (PE) clients on potential deals.

A spokesperson for Indira IVF, which has 115 fertility clinics in India, said it was in the “early stages” of talks over a stake sale.

According to an investor source, it is looking to sell a majority stake valued at $1bn, and global private equity firm General Atlantic was among the interested parties.

General Atlantic did not respond to a request for comment.

Even in the world’s most populous country, many couples need fertility treatment, which is why the Indira IVF chain has become an attractive proposition for potential suitors, as have other specialist healthcare providers.

CARE Hospitals Group, according to another investor source, is in talks to sell a 70pc stake to US investment giant Blackstone in a deal valued at $800 million. CARE has 16 facilities in seven cities, and offers top-end 3D laparoscopic surgeries and kidney transplants.

Blackstone declined to comment and CARE did not respond to requests for comment.


As government hospitals became increasingly overburdened and incomes rose in India’s vast middle class, demand for private healthcare rose over the years.

But demand positively boomed in the aftermath of the COVID-19 pandemic, when India suffered one of the world’s worst death tolls from the virus.

“The India healthcare opportunity has always been attractive, but never more than now. COVID accelerated awareness,” said Gaurav Sharma, a partner of Bahrain-based Investcorp in Mumbai.

After investing $67m in India’s Clove Dental chain last year, Investcorp expects demand for preventive treatments to rise and is eyeing more deals, especially when assets are in smaller towns and cities.

Indian private equity firm Kedaara Capital invested $150m in two hospitals recently, and is now evaluating more deals as it sees patients are opting for branded chains for better care, Chief Investment Officer Nishant Sharma said.

Another specialty chain, Centre for Sight, is in talks to sell a stake at a valuation of $200 million, one industry source said.

The eye care group did not respond to a request for comment.

The attraction of single specialty hospitals, Sharma said, is that they are smaller in size, require less investment, but can generate superior returns as demand rises.


Striking the largest healthcare deal ever in India, Singapore’s state investor Temasek spent $2 billion in April lifting its stake in Manipal Hospitals, one of largest multispecialty chains whose services include cardio and neuro surgeries, by 41pc to 59pc.

India stands out from the rest of Asia, where there have been far fewer deals for hospitals this year, Dealogic data shows.

In 2022, PE investors spent $3.2bn buying stakes in hospitals in India.

Thanks solely to the Temasek deal, India accounted for 40pc of the private equity investment made in hospitals globally during the first five months of this year.

Separately, hospitals in India have been buying each other at near record rates, with M&As totalling $4bn in 2022 and $2.2bn in the first five months of this year.


While COVID-induced behavioural change is one factor behind the burgeoning demand for private care, India’s growing and gradually ageing population, rise in income levels and high disease burden – measuring years lost to lengthy illness or early death – are fundamental reasons why it has become an increasingly desirable option for families who can afford it.

The trends are evident in the financial reports from Apollo Hospitals (APLH.NS), one of India’s largest chains.

Between 2019 and 2022 Apollo’s average daily revenue per bed shot up by a third to $553. And during the same period, the number of annual outpatients rose by 65pc to 6.8m.

The change in Indians’ attitude to private health insurance in recent years, which became even more marked during the pandemic, has given confidence to investors looking to put money into the country’s healthcare businesses.

In 2020/21, regulatory data shows that premiums for health insurance policies rose 25pc to $8.8bn – the highest for at least five years.

Previously, one of the main considerations for Indians buying health insurance was that it gave them tax breaks, but these days, people, like the patients sat in an air-conditioned corridor at the Indira IVF hospital in Pune, appreciate getting what they pay for.

If they had gone to the government hospitals serving the surrounding towns, they would have faced more discomfort, longer queues and would have been unlikely to get the treatment they want.

“Big private hospitals are more reliable,” said 35-year-old G Chavan said as he accompanied his wife to see a doctor. “This place gives some comfort.”