GIC commits $100m to Indian eye-care chain

According to AVCJ Research, PE firms have committed $324 million to Indian healthcare companies across seven deals so far in 2012. Hospitals and treatment centers account for four transactions and 80% of the total spending.

The latest deal is Government of Singapore Investment Corp's (GIC) $100 million acquisition of a minority stake in Vasan Healthcare, which runs eye care hospitals across India. It comes barely two months after Olympus Capital committed a similar amount to DM Healthcare, a chain of hospitals, medical centers and pharmacies in India and the Middle East.

"The promoters of Vasan, in a short span of time, built Vasan as a leader in the healthcare sector," says Ang Eng Seng, global head of GIC's direct investments group. "The completion of this transaction also underscores our commitment to increase our investments in India."

GIC is not the first private equity player to be attracted to Vasan, which reported revenues of INR5 billion ($100 million) for the most recent fiscal year. The company is also backed by the likes of Sequoia Capital and Westbridge Capital, which together committed $40 million to the healthcare chain across three rounds since 2008. While Sequoia and Westbridge provided the early impetus to Vasan, the company sees GIC's financial clout as a stepping stone to the next level - its emergence as a healthcare provider with international standards.

Investor interest in eye-care services is rooted in growing domestic demand. "The market is currently close to $3 billion in size and some of the industry players are achieving 30-40% growth year-on-year," Amit Mookim, head of healthcare of KPMG India, tells AVCJ. "Specific healthcare assets such as eye-care centers deliver high revenues at better growth rates than multi-specialty chains."

However, Mookim cautions that investor appetite has yet to be matched by deal supply - India is seeing only 18 private equity investments in the sector each year. The bottom line is there are few hospitals with the skills and manpower to warrant private equity commitments. They might only reach this stage after several rounds of VC funding and support.

"Businesses like Vasan, which has a good set of skills, are already moving up the value chain for investors," Mookim says. "When you also consider the increasing number of strategic investors coming into the Indian market from different countries, the sellers often receive attractive valuations."

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• Topics
• Southeast Asia
• Healthcare
• Expansion
• India
• healthcare
• Growth capital
• GIC Private
• Sequoia Capital
• WestBridge Capital Partners