Creador acquires 22 per cent stake in Paras Healthcare for Rs 275 crore
NEW DELHI: Malaysian private equity firm Creador has acquired a minority stake in Paras Healthcare through affiliate Commelina for Rs 275 crore, officials from both companies confirmed.
According to persons close to the development, Creador has picked up approximately 22% stake in Paras. Dharminder Nagar, managing director, Paras, said the group intends to use the funds raised to expand its presence to Uttar Pradesh, Jharkhand, Madhya Pradesh and Rajasthan and is evaluating five projects.
"There is an affordability gap even in metropolitan cities. We cut down on the frills and show but we don't compromise on either technology or clinical quality," Nagar told ET.
The group currently operates a chain of five secondary and tertiary care hospitals — including two mother and child care specialty centres — in Delhi, Haryana and Bihar.
Anand Narayan, managing director, Creador Advisors India LLP, concurred that most of India — save the metros — offers an average of nine beds for every thousand patients, compared to 30 beds globally.
Avendus Capital was the financial advisor and Khaitan & Co was legal counsel for the transaction.
Creador’s investment comes at a time when there is a nascent interest in healthcare services that cater to middle and lower income groups, but very few successful models.
"Aspirationally, there is an interest (in such investments), but there are some challenges. You can build hardware which is the hospital and infrastructure anywhere, but you need doctors to operate it," Narayan told ET.
Recruiting experienced doctors in these tier II and III locations and ensuring quality of service is the same across locations is the biggest challenge, he said. Gurgaon-headquartered Paras focuses on middle income patients in underserved regions of north India and has demonstrated strong growth and profitability, according to Creador.
Paras’ revenue has grown at a 35% compound annual growth rate in the past three years to Rs 440 crore in 2016-17, from Rs 180 in 2013-14, said the hospital group.
Over the next four years, Paras expects to construct and acquire on lease two hospitals in Uttar Pradesh. It will also acquire and remodel a hospital in Jharkhand through brownfield investments, said Nagar. The group plans to move its Gurgaon unit to a larger facility and expand capacity in Bihar to accommodate 700 beds, from the 300 at present.
Creador is focused on long-term investments in growth-oriented south and south east Asian businesses. This is the PE firm’s ninth investment in India after its private transaction with Ahmedabad-based drug maker Corona Remedies last year.
India requires 6,00,000-7,00,000 more beds over the next six years, indicative of an investment opportunity of $25-30 billion, according to India Brand Equity Foundation.