US-based private equity firm New Enterprise Asspciates (NEA)-backed Nova Medical Centers (Nova), a specialised day care surgery centre chain and Max Healthcare Institute Limited (MHC), a New Delhi based hospital chain, have entered into a joint venture to expand the reach of day care surgery in the National Capital Region. Max Healthcare will hold a 31% stake in the JV entity.
The financial setails of the transaction are not known. Max Healthcare Institute Ltd (MHIL) recently raised equity investment of about $25 million from International Finance Corporation (IFC), the private investment arm of the World Bank. The name of the new JV company will be ‘Nova Medical Centres NCR Region’.
This strategic alliance is designed to help both companies maximise the reach and efficiency of their services. Nova is set to expand its reach across the NCR region with two day care centres scheduled to open in the next few months with plans to reach a total of six centers in the near future, the surgery center chain said in a statement.
This JV will allow Nova Medical Centers to access the pool of clinicians practising at MHC hospitals. MHC’s hospitals in turn would be the preferred referral destination for all major surgeries and advanced diagnostics cases required for the Nova patients, which cannot be performed at the day care centers.
In a day-care surgery, patient is admitted for investigation or surgery on a planned, non-resident basis. Internationally, almost 70% of all surgeries are conducted as day care surgeries, and this trend is on the rise in India as well. Nova started its day care surgery centres in Bangalore last year and claims to have gained enough customer acceptance and growth. The JV will also enable Nova to undertake major surgeries including cardiac, obstetrics, organ transplants, emergency/trauma care, overnight stay, and advanced diagnostics like MRI, CT etc.
Suresh Soni, Chairman, Nova Medical Centers, said “We are extremely pleased to announce the JV with Max Healthcare. Max is a well known brand in the medical and healthcare business in the NCR and our association with them will prove beneficial for both parties not just in terms of business and referrals, but also in terms of knowledge sharing and access to specialised doctors and surgeons”.
Pervez Ahmed, CEO & MD, Max Healthcare said “We look forward to partnering Nova Medical Centers as we work towards further expanding our reach. Day care surgery represents the new face of the surgical field, and increasing number of such surgeries stands testimony to the fact that patients and doctors alike have realized the tremendous value offered by this surgical mode.”.
According to a KPMG study, the Indian healthcare industry is projected to grow by an average of 5.8% per annum between 2009 and 2013 taking the total expenditure in 2013 to $14.2 billion. The availability of hospital beds in India lags behind at just over 0.7 against a world average of four beds per 1,000 people. Growing income levels and shift in disease profile from chronic to lifestyle diseases will further enhance the growth, the study added.
Since 2007, there have been many PE deals in the hospital space including investments by Trikona Trinity in Fortis Healthacre, Apax Partners in Apollo Hospitals, Sequoia Capital in Vasan Healthcare, Citigroup in Wockhardt Hospitals Ltd, India Venture Advisors in Sri Kavery Medical Care and JP Morgan Partner’s $100-million investment in Narayana Hrudayalaya Pvt Ltd.
This year, apart from NEA’s Nova deal, three more were struck in the hospital space. International Finance Corp has invested $25 million in Max Healthcare Institute, GIC Special Investments Pte Ltd invested in Fortis Healthcare ($85 million) and India Build-Out Fund I in Healthcare Global Enterprises Ltd ($6.75 million). According to VCCEdge data, since 1996, about 132 PE deals were inked in the Indian pharma & healthcare space with an overall deal value of $2.47 billion.