Private equity firm Sabre Capital Worldwide has got commitments of Rs 250 crore to invest in India's healthcare space. Sabre Capital has set up a company called Spring Healthcare Ltd through which it plans to make these investments. Spring Healthcare will act as both an investment and operating company and is not structured as a private equity fund. The funds for investments have been raised from large family offices of Asia and a few healthcare focused institutions from the US, said Rajiv Maliwal, co-founder and managing partner of Sabre Capital, in an interview to VCCircle. Maliwal is also the chairman of Spring Healthcare.
The investment corpus can be increased when there are more attractive opportunities. "If we have the right opportunities we will have Rs 1,000 crore," Maliwal said.
Spring Healthcare is looking to invest in mid-sized, specialised hospitals which have 100-200 beds. It's also looking at path labs, dialysis labs, in vitro fertilization (IVF) labs and also CROs (Contract Research Organizations). "We will also do maybe one or two greenfield hospitals," says Maliwal. Spring Healthcare is not looking at companies in drug discovery or pharmaceuticals space.
A large number of private equity firms are looking at investing in the healthcare space in India. But Maliwal believes that the opportunity is too large. The developing markets of China, Brazil and Korea have 3-4 beds per 1,000 persons. India has less than 1 bed per 1,000 persons. "We need to add 20 lakh beds just to catch up," he adds.
Spring Healthcare has already invested Rs 65 crore in Pune-based Oyster and Pearl Hospital, which specialises in child, woman care and in vitro fertilisation. Oyster is now planning to open three more hospitals in the region of Western Maharashtra. The investee companies will typically expand in their own regions, said Maliwal.
Spring Healthcare is looking to invest in cities beyond the top 6-8 metros in the country. The hospitals, being specialised, will be somewhat high end. Spring Healthcare is also building functional capabilities in areas like hospital management services, information technology, finance & administration which they will bring to the hospitals they invest in.
From Finance to Healthcare
Sabre Capital now seems to be moving away from banking & finance, where it has been its area of speciality. "At the moment for the next few years our principal focus is on healthcare," said Maliwal.
Sabre acquired management control of the then ailing Centurion Bank in 2003 with other investors and was responsible for turning it around. Centurion Bank was later merged with Bank of Punjab and then sold to HDFC. Sabre Capital got a 103% IRR on its investment, said Maliwal. It also set up Lotus India Asset Management with Singapore state investor Temasek, an investment which did not turn out well and was sold to Religare Enterprises last year.
It also floated private equity fund called Sabre-Abraaj Capital with Dubai-based Abraaj Capital which was planning to raise $250-300 million. The fund has managed to raise only $100 million, and has invested all the capital. The investments from this fund are in infrastructure space which include Ramky Infrastructure, ECI Engineering Construction, and Man Infraconstruction.
Maliwal believes that distress opportunities in India are not yet available. "I think distress opportunity is still not there because the Indian industry has done pretty well," he said. Businesses in India are slowing down but they do not have a big problem like they have in US, adds Maliwal.