Sequoia Capital exited investment in Cygnus Medicare with 1.5x returns
Sequoia Capital exited its three-year old investment in Delhi-based healthcare startup Cygnus Medicare Pvt Ltd a few weeks ago in what could arguably be one of its first full exit this year, sources privy to the development told VCCircle.
Cygnus, which is an asset-light healthcare services firm operating hospitals on management contract, had raised funding from Somerset Indus Capital Partners in April this year. It had not disclosed the deal amount but sources said the deal had primary and secondary components.
Sequoia Capital, on its part, invested a small sum at an early stage, but did not publicly disclose its investment.
One source said the VC firm had put in around Rs 5.4 crore in two tranches in 2010 and 2011 in a firm called Altius Healthcare. Altius Healthcare was founded in 2008 by two doctors Shuchin Bajaj and Naveen Nishchal besides Ruchin Bajaj, a management professional. The company operated small multispecialty hospitals on an asset-light basis.
Early last year, Altius Healthcare merged with Cygnus and Sequoia Capital picked shares of Cygnus in a share swap, according to sources who did not wish to be identified. Cygnus also works on an asset-light model and operates multispecialty tertiary hospitals in Delhi NCR and Haryana.
In April this year, Sequoia sold its stake worth around 7.5 per cent in Cygnus to Somerset for close to Rs 8 crore, making around 1.5X returns on its three-year old investment. Somerset also separately invested around Rs 15-16 crore in Cygnus through fresh issue of securities. Cygnus is presently valued around Rs 100 crore.
When contacted, Somerset and Cygnus spokespersons declined to comment on the transaction. Sequoia Capital executives who manage healthcare investments did not respond to a VCCircle email query, at the time of publishing this article.
Cygnus was founded by a Delhi-based doctor Dinesh Batra and is now co-promoted by two other doctors Sudhir Gupta and VK Rajoria besides the promoters of Altius Healthcare.
The business model of the company is to acquire ailing multispecialty hospitals on a long-term lease and operate them under the Cygnus brand.
“We take over the hospital and invest in it. We renovate the front facade, put in glass structures, renovate interiors, install CT-scan, digital X-Ray machines among others. It takes us around two to three months to do this and we invest around $1 million per hospital,” said Shuchin Bajaj, director of Cygnus.
He declined to comment on how much Somerset invested or the previous investment by Sequoia Capital but said the company has already utilised the capital it raised from Somerset and is going to focus on consolidating these properties.
Cygnus is managing seven multispecialty hospitals and renovating two more. The company will focus on districts of Haryana which do not have multispecialty or super specialty care.
“Except Hisar, Gurgaon and Faridabad, no other district of Haryana has any super specialty centres. If patients are critically ill they either have to go to Delhi NCR or Punjab. Many serious patients of trauma die on the way,” he said.
In FY12, Cygnus clocked revenue of Rs 12 crore which rose to Rs 29 crore for the year ended March 31, 2013 and the firm is aiming at Rs 59 crore in FY14.
(Edited by Joby Puthuparampil Johnson)
Sequoia Capital India Advisors Pvt. Ltd. is a venture capital firm with around $1.93 billion assets under management. It provides seed, late and growth stage capital to companies operating in India. The firm seeks to invest in technology, healthcare, foods and beverages, outsourced services, pharma, consumer, finance, education, manufacturing, hospitality, media and entertainment, energy, retail, infrastructure and telecom sectors. It invests between $0.1 million and $1 million in seed stage, $1 million and $10 million in early stage and $10 million and $100 million in growth stage companies. Sequoia Capital India was formed by the merger of Sequoia Capital and WestBridge Capital Partners on May 2006. On February 2011, WestBridge Capital Partners has spun out from Sequoia Capital India and formed new entity WestBridge Capital Partners.
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Cygnus Medicare Pvt. Ltd. engaged in providing medical care through its chain of multi speciality hospitals. It offers cardiology, radiology, pediatrics, minimal access surgery, eye care, cosmetic surgery, radiology, urology and gynaecology etc. The company was founded in 2011 and is based in Delhi, India.