Rudrabhishek Infra Fund investing $5.9M to set up hospital in Lucknow, partners with Narayana Health
Delhi-based Rudrabhishek Infra Fund (RIF) is investing Rs 40 crore (around $5.9 million) to set up a mid-size hospital in Lucknow, the state capital of Uttar Pradesh, in a one-of-its-kind deal in healthcare involving a private equity fund, sources told VCCircle.
The investment will be through a special purpose vehicle (SPV) and the 300-bed multi-speciality, tertiary care hospital will be set up in partnership with Dr Devi Shetty promoted Narayana Health (NH) of Bangalore. NH, formerly known as Narayana Hrudayalaya, will not hold any equity stake in the venture but will invest in putting the equipment and run the centre.
The SPV owned by RIF will additionally raise Rs 30 crore (around $4.4 million) in debt to complete the project. The hospital would require a total investment of Rs 110 crore. Apart from RIF investing Rs 40 crore, NH will make an indirect investment of another Rs 40 crore by bringing in medical equipment.
Although PE firms have invested in a few sectors like hospitality where they started hotel chains from scratch, this is a rare deal in healthcare services.
Delhi-based Finnacle Capital Advisors was the investment banking firm which advised on the transaction.
When contacted Viren Shetty, senior vice president (Strategy & Planning) at NH, confirmed the firm’s involvement and said, “We will equip the hospital with medical equipment; we will staff it and manage the operations. We will work on a revenue-sharing basis.”
The construction of the hospital is slated to complete in 18 to 24 months. NH would provide services in various medical segments, including cardiology, cardiac surgery, neurology, neurosurgery and nephrology.
“We plan to increase our footprint in UP and Rajasthan. In UP, the plan is to be present in every major city. The size of hospitals will depend on the opportunity available to us and the size of the city. It could be between 100 and 250 beds,” Shetty said.
He added that this is first time that the company has tied up with a PE player for a specific project.
“This is the first time a PE player has actually set up a hospital in this structure for us,” he said. He added that in the future, NH could look at this model and also look for more collaboration with local partners to start more hospitals.
The group had previously set up a JV with American company Ascension Health (where NH holds 30 per cent) to build a heart hospital in the Cayman Islands. NH had previously raised funding from JP Morgan Partners and PineBridge Capital.
This is also possibly the first investment for RIF which plans to have a strong focus on healthcare besides its overall impetus on realty linked deals. RIF registered itself as an infrastructure fund under SEBI’s AIF guidelines early this year. This allows it to invest primarily in unlisted securities or partnership interest or listed debt or securitised debt instruments of investee companies or SPVs engaged in or formed for the purpose of operating, developing or holding infrastructure projects. Healthcare related investments are not classified specifically under any specific head under AIF but could be clubbed as a social infrastructure.
“Rudrabhishek Infra Fund for its future investments in healthcare would like to replicate this model of creating hospital infrastructure with NH in other cities and states as well,” Shravan Kumar Govil, CEO of Rudrabhishek Financial (RFAPL) said.
According to Govil, RIF plans to expand in more cities of UP including Kanpur, Allahabad and Varanasi through a series of satellite hospitals.
(Edited by Joby Puthuparampil Johnson)
Aarogyam Narayana Health Hospital is 300-bed multi-specialty, tertiary care hospital. Its services include cardiology, cardiac surgery, neurology, neurosurgery, orthopedics, surgical gastroenterology, urology and nephrology etc. The company was founded in 2013 and is based in Lucknow.
Rudrabhishek Infra Fund is a $15 million private equity fund managed by Rudrabhishek Infrastructure Trust. It provides capital to companies operating in India. The fund seeks to invest in Infrastructure sector.