CDC invests $48M in IPO-bound Narayana Health

UK-based development finance institution CDC Group Plc is investing $48 million (Rs 300 crore) to pick a minority stake in Devi Shetty-promoted multi-specialty healthcare provider Narayana Hrudayalaya Pvt Ltd, the firm which runs hospitals under the banner of Narayana Health, it said on Wednesday.

VCCircle was the first to report that CDC is coming in as a pre-IPO investor in the firm. Although the firm is yet to talk formally about its IPO, as reported by VCCircle earlier, it is in the final stages of appointing bankers for the proposed issue.

The healthcare company will utilise the capital to build or expand hospitals in cities such as Lucknow, Kolkata, Bhubaneshwar and Bangalore.

“CDC aims to invest in businesses that create jobs and provide services and economic opportunity in poorer regions of India. Narayana Health's commitment to extend healthcare to the low income states of India and to reduce the cost of that care made it an ideal partner," Srini Nagarajan, CDC's head of South Asia, said.

Founded by renowned cardiologist Devi Shetty, Narayana Health had raised around $100 million from JP Morgan Partners (whose portfolio is now managed by its spinoff CCMP Capital) and PineBridge Capital in early 2008.

Narayana Health started with a 300-bed hospital in 2001 and now has grown to become as India's third largest hospital with 29 hospitals in 17 cities in India. The company currently employees over 12,500 people and expects to create at least an additional 8,000 jobs.

“Narayana Health wants to transform the way healthcare is delivered across the world and CDC has the right approach towards addressing social issues in developing countries. We partnered with CDC because they are interested in long-term societal transformation and this objective is closely aligned with our goal,” Devi Shetty, NH’s founder and chairman said.

The firm's PE investors have a seven-year investment agreement which is expiring soon, post which they would be looking at part or full exit.

CDC has been an active investor in India since 1987 and is one of the major sources of capital for private equity funds in India. The company invests in India through the fund-of-fund route besides making direct investments in Indian companies.

It recently made $11 million equity investment in the Indian microfinance institution, Utkarsh. Based in Uttar Pradesh, the company provides financial services to the under-served and unbanked low-income rural population in the north east. CDC made a number of other direct investments in India in 2014 including Ratnakar Bank and another microfinance company, Equitas.

(Edited by Joby Puthuparampil Johnson)

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