Energy transition case study: Hermina and AIG

The tricky aspect of minimising the energy footprint at hospitals is the fact that they never close, so there is little opportunity to optimise power usage. All the lights and all the core equipment are on all the time. Back-up power is a matter of life and death, so it has to be reliable, which means diesel trumps renewables.

Singapore-based healthcare specialist Quadria Capital has exposure to this space in at least seven hospital chains, among them Hermina, one of the largest operators in Indonesia, and AIG, India’s leading gastroenterology specialist. They don’t use much power, but they do what they can to curb it.

Natural light is maximised in window design to reduce lighting costs. Elevators are run more efficiently. Solar units are in the parking lots. At AIG, 45% of electricity used for water heaters is coming from solar.

“Companies are trying to have this conversation with us to make their operations more efficient,” said Shivani Sahai, Quadria’s ESG [environment, social, and governance] manager. “They don’t want to take up high capex in sustainability. But small measures like switching to LED lighting, they’re seeing other companies doing it, and the government is pushing, so it’s adding up.”

Quadria first backed AIG in 2015, taking a 17% stake for an undisclosed sum. The GP invested an additional USD 55m in 2019, taking out a position held by Samara Capital that reportedly brought its ownership to 30%. An increase in the energy footprint during this period is implied by the construction of a second hospital in Hyderabad more than twice the size of the original location.

A minority stake in Hermina, which operates about 40 hospitals nationwide, was acquired last year for an undisclosed sum. The Jakarta-listed company publishes annual sustainability reports and generated its first solar power last year.

Hermina’s annual electricity usage has ticked up in recent years, reaching about 52.7m kilowatt-hours in 2021. However, this total equates to only about 8,975 kWh per bed, based on the number of beds at the end of 2021, well behind the industry average of around 29,000 kWh per bed. For context, 29,000 kWh is the equivalent of 2.4 homes’ electricity use for a year in the US.

“Hospitals aren’t too energy-intensive, so there would not be a very negative screen in terms of due diligence,” added Rahul Agarwal, a managing director, at Quadria. “It’s more about, how do we optimise them further?”

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• Topics
• South Asia
• Southeast Asia
• Healthcare
• India
• Indonesia
• Quadria Capital
• energy
• renewable energy