Investor interest in hospitals in India has surged with private equity (PE) and venture capital (VC) firms investing over 15 times more in the sector in the past four years. According to research firm Venture Intelligence, investments in hospitals by PE and VC funds increased from Rs 1,921 crore ($256.7 million) in 2019 to over Rs 30,000 crore ($4 billion) in 2023. This growth comes amid an overall decline in funding globally, with PE and VC investments in India dropping by 38% in 2023.
The Covid-19 pandemic has driven demand for private healthcare in India, leading to investments in large hospital chains such as Manipal and Max. Other factors driving growth in the sector include an ageing population, an increase in lifestyle ailments, and rising incomes. Private equity firms are investing in established hospital groups and single specialty hospitals, attracted by the potential for growth and scale.
In 2023, the hospital sector saw 13 major deals, including the $2.4 billion investment by Singapore’s sovereign wealth fund, Temasek, in Manipal Hospitals, and the Rs 5,775 crore ($771.4 million) investment by Blackstone in Care Hospitals. Mergers and acquisitions (M&A) have become a hot segment of the healthcare industry, with PE firms investing in and acquiring large network hospitals that offer a homogeneous network and have size and scale.
Overall, India’s healthcare delivery ecosystem has revealed a massive demand-supply gap during the pandemic, leading to a surge in private equity interest in the sector. Private equity players are attracted by the potential for growth in the healthcare industry, as well as the strong demand for hospital stocks in public markets. The hospital sector is expected to continue to attract significant interest from private equity investors in the future.
