Vaatsalya, a hospital chain focussed on affordable healthcare in semi-urban and rural areas in Karnataka, is looking at the M&A route to quickly scale up its presence. It plans to add 35 hospitals to its portfolio in the next three years, expand geographic spread to Maharastra and Andhra Pradesh and also foray into diabatology as a specialty offering.
Vaatsalya raised $4.5 million in second round of funding from Oasis Fund along with returning investor Seedfund and Aavishkaar in March 2009. “Our criteria is to get access to a good hospital, which has a good reputation in the town. We are looking at both organic and inorganic route, probably an equal mix,” said Dr Ashwin Naik, CEO, Vaatsalya.
Vaatsalya's plan to consolidate its presence is actually a validation of the huge regional play opportunity that exists in the fragmented Indian healthcare space. This sector offers tremendous roll-up opportunities for private equity players who look at scalable models.
The company will utilise part of its $4.5-million fund in chasing M&A activities and expansion purposes. It may look at raising another round in a year to create a regional network of hospitals across at least five states. The fund will be raised through a mix of equity and debt. Meanwhile, Naik stated that the equity investors at that stage will have to bring in strategic inputs and not just money. In the first round, Vaatsalya raised Rs 6 crore from Seedfund and Aavishkaar in 2008.
With the addition of 35 hospitals, Vaatsalya's customer base will touch 1 million. In the first phase, the company is looking at expansion in Maharastra and Andhra Pradesh. “We have a team in place in Maharastra and Andhra, and we are actively looking at opportunities. We will launch around 4-5 hospitals at once and capture a larger customer base,” added Naik.
Vaatsalya currently runs nine hospitals and clinics at places like Hubli, Gadag, Bijapur, Mandya, Raichur, Hassan, Mysore, Gulbarga and Shimoga in Karnataka with a total of over 500 beds.