Private equity investment in the healthcare industry is peaking.

This year (till September), total PE investments in the sector have more than doubled to $754.33 million, across 30 deals – from 26 deals totalling $320 million last year, according to a research report on the healthcare industry by LSI Financial Services.

Healthcare is emerging as a favourite among investors, after technology and real estate, said Shantanu Deb Mookerjea, Executive Director – Equity, LSI Financial Services.

The $65-billion domestic healthcare market is slated to touch revenues of $155 billion by 2017, fuelled by PE investments and private sector spending, said Rajya V. Kajaria, Managing Director, at the launch of the report.

Most of the PE deals have come in hospitals.

The major investments this year include $100 million by the Government of Singapore Investment Corporation in Vasan Healthcare, $110 million by Advent International in Quality Care (Care Hospitals) and $98 million by Olympus Capital Holdings Asia in DM Healthcare.

With hospitals springing up in tier-II and III towns in the next couple of years, PE interest is bound to go up, said Mookerjea.

Going forward, pathology labs, clinical trial companies and medical equipment makers are likely to attract investments, said the report. Telemedicine and medical tourism also hold potential.

Funds exclusively focused on healthcare, such as Advent and India Ventures, are emerging.

Smaller tranches of funds are also being available these days. Fund sizes have gone down to $25-30 million, from $80 million a few years ago.

Kolkata-headquartered LSI Financial Services is an investment banker offering services such as issue management and private equity sourcing.

(This article was published on December 7, 2012)
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