WestBridge renews commitment to Pathlabs

Back then, the Gurgoan-headquartered company, which provides diagnostics and pathology services, consisted of one central laboratory and 10 satellite laboratories. Annual revenue was around INR400 million ($7 million) and the company had been valued at INR1 billion.

Eight years on, Pathlabs is worth more than INR15 billion, with a network of 125 satellite laboratories nationwide. Last week, WestBridge renewed its commitment to the company through a joint $44 million investment with TA Associates. WestBridge was responsible for the lion's share of the equity, putting in $35 million from the WestBridge Crossover Fund.

The two investors committed a similar amount in 2010 and together the investment tranches bought up the remainder of the roughly one third share in Pathlabs held by the 2000-vintage WestBridge Venture Fund I.

Sandeep Singhal, co-founder and managing director at WestBridge, explains the firm had the option of selling its significant minority stake to TA or another investor, but decided to retain an interest by investing through the Crossover Fund. "This has been one of our largest commitments in the company so far," says Singhal. "We are very bullish about its prospects, both in the medium term and long term."

This investment also stands out as the Crossover Fund's first commitment to an unlisted company, having previously targeted PIPE deals. The vehicle, which reached a final close of $500 million in 2011, was established when WestBridge re-launched its independent operation after five years under the Sequoia banner. It had a broad remit from the outset..

"This may be the first private investment but we have flexibility to invest in both private companies and early public companies - we invest either side of the line," says Singhal.

When WestBridge first invested in Pathlabs, the business had yet to capture the potential of India's nascent healthcare sector, but now the company wants to add another 35-40 laboratories by 2014 and is looking at acquisition opportunities in Bangalore, Chennai, Hyderabad and Kolkata. With a projected compound annual growth of 35%, it is expected to generate turnover of INR45 billion for the 2013 fiscal year.

WestBridge is not considering exit options given that Pathlabs still has compelling growth opportunities - both organic and inorganic - in a market that remains dramatically underserved.. "Pathlabs' rapid expansion is a testimony to the service the company provides and a testament to the opportunity in the Indian healthcare sector," Singhal adds. "The business prospects of the sector in a medical care-starved country like ours are very high."

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• Topics
• South Asia
• Investments
• Venture
• Healthcare
• PIPE
• WestBridge Capital Partners
• India
• healthcare
• Growth capital
• TA Associates