Abraaj, CDC back India’s Rainbow Hospitals

This is CDC's first direct deal in India since launching a revised strategy last year under which its existing fund-of-funds approach was complemented by a return to direct investments.

Established in 1999, Rainbow claims to be India's largest specialized pediatric and maternity care company, with four maternity, pediatric and neonatal intensive care units, and one outpatient clinic in Hyderabad. It has a capacity of 450 beds.

Having started out as a single, 60-bed hospital in Hyderabad's Banjara Hills district, Rainbow has added for centers in the last six years and will use the capital injection to expand its coverage beyond Andhra Pradesh. There are plans to open hospitals in Bangalore, Chennai and Pune, taking the number of beds available to nearly 1,000 by 2017.

"There is a pressing requirement in the Indian healthcare sector for pediatric healthcare infrastructure due to the demographics of the country, which witnesses high fertility, maternal and infant mortality rates. The private sector has a critical role to play in helping to reduce fatalities and improve healthcare facilities through targeted investments," said Balaji Srinivas, managing director at Abraaj, in a statement.

Srini Nagarajan, CDC's regional director for South Asia, added that Rainbow's employee headcount, currently around 1,000, is expected to grow as much as fourfold, driven by projected annual growth of 15% for India's healthcare market over the next decade. CDC also plans to help Rainbow become a national center of excellence for teaching pediatric medicine, as well as improving environmental, social and governance standards.

After eight years spent operating primarily on a fund-of-funds basis, CDC announced in 2011 that it would return to direct and debt investments, with the expectation that each would account for 20% of its global portfolio by 2015. The strategic review also resulted in the group focusing exclusively on South Asia and Africa.

CDC plans to commit $1 billion to India over the next 4-5 years, with nearly half of it coming through direct investment. It broke off direct investments as part of a reorganization that led to the spin-out of Actis in 2004. Two former Actis executives in Asia, Nagarajan and Mark Pay, have been recruited in the last year.

CDC reported a return for 2012 of GBP223 million ($345 million) as its total assets grew 8.6% to GBP2.8 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Healthcare
• Expansion
• India
• healthcare
• Growth capital
• CDC Group
• The Abraaj Group