Paras Healthcare looks to raise Rs350-400 crore from PE funds

PUNE, India - Dec. 12, 2016 - PRLog -- Healthcare group Paras Healthcare, which runs Paras Hospitals in north India, has started talks with private equity (PE) funds to raise about Rs350-400 crore to finance expansion, two people aware of the matter said. The hospital chain has hired Avendus Capital to advise on the stake sale.

The owners will sell about 25-30% stake in the company, the first of the two persons said. The names of the PE funds could not be ascertained.

Paras joins several other leading hospital chains in the country which are looking for a fund-raising or outright sale. Others up for sale or stake sale include IDFC Alternatives Ltd-backed Sahyadri Hospitals Ltd, the largest chain of multi-specialty hospitals in Maharashtra; Multiples Alternate Asset Management Pvt. Ltd-owned Vikram Hospital (Bengaluru) Pvt. Ltd; Ascent Capital Pvt. Ltd and OrbiMed Advisors LLC-backed Kerala Institute of Medical Sciences, the hospital chain with a presence in India and West Asia; Mumbai-based maternity clinic chain Surya Mother & Child Care Super Speciality Hospital and Hyderabad-based Sunshine Hospital.

"We as a company don't dwell on any speculation. We are still reviewing a number of aspects and shall soon be releasing a detailed press release with the details," said a Paras spokesperson.

Established in 2006, Paras has six hospitals so far. Apart from multi-speciality hospitals in Gurgaon, Darbhanga, and Patna, it also has mother and childcare centers under the Paras Bliss brand. Paras Bliss has facilities in New Delhi, Panchkula and Noida.

The fund-raising is mainly for setting up chains in rural parts of north India, said the second of the two persons mentioned above on condition of anonymity.

By 2020, Paras plans to establish tertiary healthcare facilities in other tier-2 and tier-3 cities with a proposed bed strength of 1,500, according to a statement on the company website.

"Our target is cities with a population of 2 million plus that have a medical college. The focus will be on establishing tertiary care centers that focus on oncology, cardiology, orthopedics and neurology. These will evolve into specialized transplant centers," said Dr. Dharminder Nagar, managing director, Paras Healthcare in his statement.

"This year, the group is expected to have revenue cross Rs500 crore, and that should become Rs1,000-1,200 crore within the next 5 years with additional beds, services, and hospitals being added," he added.

In order to fill the supply gap in healthcare, several groups are in talks for raising PE funds.

The healthcare delivery system in India will need to add 3.6 million beds, 3 million doctors, and 6 million nurses over the next 20 years, requiring around $245 billion, PricewaterhouseCoopers said in a January 2015 report.

According to the report, India has only 1.3 hospital beds per 1,000 people, significantly lower than the World Health Organization's guideline of 3.5 beds.

The potential in the Indian healthcare system has attracted many global as well as Indian PE investors to acquire significant stakes in hospital chains.

In January, Dubai-based investor Abraaj Group acquired (https://mnacritique.mergersindia.com/) a majority stake in Hyderabad-based hospital chain Quality CARE India Ltd from global PE firm Advent International in a deal worth Rs1,700 crore.

Malaysian healthcare services major IHH Healthcare Bhd bought a 73.4% stake in Hyderabad-based Ravindranath GE Medical Associates Pvt. Ltd (Global Hospitals) for Rs1,284 crore in August 2015.

Domestic fund India Value Fund Advisors (IVFA) invested Rs400 crore for a minority stake in Bengaluru-based maternity and infant care chain Cloudnine Hospitals in December last year.

Similarly, US-based fund Carlyle Investment Management LLC had bought a 27% stake in Naresh Trehan's Medanta Medicity in 2013. Singapore's state-owned investment firm Temasek acquired about 18% in Medanta last year.