Mumbai: Dr. Agarwal’s Health Care Ltd is looking to raise as much as Rs300 crore from private equity funds to expand its eye-care chain, run by its publicly traded unit Dr. Agarwal’s Eye Hospital Ltd, two people aware of the development said.
“The company has hired investment bank Veda Corporate Advisors Pvt. Ltd to manage the process. They are looking to raise about Rs 200-300 crore,” said one of the two people cited above, requesting anonymity as the talks are private.
Dr. Agarwal’s Health Care, the holding company, owns about 71.75% stake in the listed entity.
Hong-Kong based private equity fund ADV Partners invested $45 million in the company in January.
“A large chunk of the ADV round went towards buying out the stake owned by earlier PE investor in the company—Evolvence India Life Sciences Fund. However, the latest fundraising round will be majorly primary capital raising, while also involving a small secondary share sale component,” said the first person cited above.
ADV Partners has invested Rs78 crore in the form of primary capital in the company, according to data from the company’s filings with the registrar of companies. Evolvence India Life Sciences Fund had in 2012 acquired a minority stake in the company for Rs60 crore.
Dr. Agarwal’s has almost 70 eye-care centers, mostly in south India. It also has centers in countries such as Cambodia, Ghana, Mauritius, Mozambique, Nigeria and Rwanda.
Dr. Agarwal’s Eye Hospital is looking to expand its presence outside south India, said the second person cited above, also requesting anonymity.
“The company is also expected to undertake a restructuring exercise to consolidate various businesses under the holding company Dr. Agarwal’s Health Care Ltd to make the organization structure leaner and simpler for a new incoming investor,” he said.
Emails and calls to the company did not elicit any response.
Emails sent to Suresh Prabhala, co-founder, and partner at ADV partners and Veda Corporate too went unanswered.
Dr. Agarwal’s Eye Hospital’s revenue rose 16% to Rs136.5 crore in the year ended 31 March from Rs118.15 crore in the previous year, according to the company’s filings with stock exchanges.
The firm reported a profit of Rs4 lakh in 2015-16, compared to a profit of Rs5.70 crore in the previous year, data shows.
Healthcare delivery services, such as hospitals, diagnostic chains or specialized treatment centers, like eye care, have been attracting strong private equity interest.
The interest, in large part, is driven by the strong growth potential of the sector.
According to a report by Crisil Research, the Indian healthcare delivery market is expected to grow at a compounded annual growth rate (CAGR) of 12% to reach Rs6.8 trillion by 2019-20.
According to Crisil’s estimates, the size of the Indian healthcare delivery industry in 2014-15 stood at Rs3.8 trillion.
According to the report, change in age demographics and rising incomes, improvement in health awareness, changes in the disease profile (towards life-related ailments), rising penetration of health insurance and increasing opportunities from medical tourism will propel demand for healthcare facilities in India.
Supply side constraints are also fueling investor interest.
The shortage of healthcare infrastructure in the country is a big opportunity for businesses, Manish Begrajka, a Mumbai-based executive director at investment bank Euromax Capital.
“When one looks at numbers such as hospital beds per 1,000 people or patient-to-doctor ratio, we are far short of the actual needs. So, there is a lot of opportunity for healthcare delivery companies to scale up,” Begrajka said.
“Supply-side growth drivers include expansion of medical infrastructure, burgeoning private sector and PE investments,” the Crisil report said.
On the eye care side, the industry has seen investments such as Singapore-based GIC’s $100 million investment in Vasan Healthcare, Matrix Partners’ Rs50 crore investment in New Delhi Centre For Sight in 2010 and Eye-Q Super Specialty Eye Hospitals Rs60 crore fundraising from World Bank arm International Finance Corporation, Helion Venture Partners and Nexus Venture Partners.
