Matrix Partners to fully exit from hospital chain Cloudnine
Concept of PE Exits. Illustration by Akshansh Maan/VCCircle. | Photo Credit: Illustration by Akshansh Maan/VCCircle

Kids Clinic India Pvt. Ltd, which operates maternity and infant care chain Cloudnine Hospitals, said on Monday multi-stage venture investor Matrix Partners has decided to sell its entire stake in the company.

Investment bank Spark Capital has been hired to facilitate Matrix Partners’ exit, Cloudnine said in a statement.

Matrix Partners had initially invested $9.95 million in Cloudnine in 2011, and later put more money along with Sequoia Capital in 2013 and 2015. It made a partial exit in December 2015 when private equity firm True North invested Rs 400 crore (about $60 million) for a significant minority stake in Cloudnine.

Cloudnine didn’t specify who will buy the stake held by Matrix or whether a deal has been finalised yet. But it said that both Sequoia Capital and True North—earlier called India Value Fund Advisors—will remain invested in the company.

Avnish Bajaj, co-founder and managing director at Matrix India, said in the statement that the firm does not comment on specific returns from portfolio companies but it has had “a great outcome already” from its investment in Cloudnine.

Separately, Cloudnine co-founder and managing director Rohit MA told VCCircle that Matrix Partners will probably exit through a secondary deal and that the process will likely take about 90-100 days.

“The bias would be toward a secondary deal. As a pioneer in the industry, the company is far too young to be looking at strategic investments at this stage,” he said. He declined to comment whether Cloudnine would also raise fresh capital at this stage.

Cloudnine, which was founded in 2007, is present in 18 locations across six cities in India and continues to add about five hospitals in different cities every year.

Rohit said the company will enter cities such as Kolkata, Chandigarh, Vashi (Navi Mumbai), Noida and Delhi this year and strengthen its operations in Mumbai, Pune, Chennai and Bangalore.

He also said there has been 10-fold growth in the number of beds since Matrix Partners first invested. The capacity to handle deliveries has also grown 10 times, to about 2,000 babies a month, he added.

The mother- and child-care segment has seen significant investor activity in the past year. Just seven months after True North's investment in Cloudnine, TPG Growth invested $33 million (Rs 220 crore) in Rhea Healthcare Pvt. Ltd, which runs a chain of mother- and child-care hospitals under the brand Motherhood, for a significant majority stake.

Matrix Partners’ exit and investments

The venture investment firm's last known exit was from women clothing brand 'W' in 2016. It also sold a bulk of its remaining stake in playschool chain Tree House Education & Accessories Ltd in February 2016. It has exited from gold loan company Muthoot Finance, too.

Matrix Partners is one of the VC firms which can boast to have backed more than one Indian unicorns, or private companies with a valuation of at least $1 billion, Ola and Quikr.

Matrix Partners was also looking to partially exit another healthcare firm, New Delhi Centre for Sight Pvt Ltd, which operates eye-care chain Centre for Sight, during the company’s planned initial public offering. However, the company scrapped its IPO citing market volatility.

Meanwhile, the venture firm went through a major churn as co-founder Rishi Navani quit in April last year to float investment firm Epiq Capital. At the time, Matrix Partners had also said that it raised a fresh corpus worth $110 million to make new investments in early-stage tech startups.

*This article has been updated to include comments from Cloudnine’s co-founder.

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