Hospital Sector Acquisitions in India: FY 24 Overview

Industry attractiveness

Healthcare in India is taken as one of the fastest growing sectors in the fastest growing economy by investors. The acquisition during FY 24 is a piece of evidence for the expectation of potential growth of the sector in India. With the rising demand, the increase in interest of strategic investors and upcoming markets brought significant transformation in this space.

Some of the key drivers for boom in hospital sector are

These all have driven an increase in demand for Indian hospital services. Tier II and Tier III cities have demonstrated tremendous potential for growth post covid.

Industry attractiveness has not only attracted private equities and venture capitalists, but the larger group hospital groups have also started acquiring strategically stand-alone units. This has driven consolidation in the industry. The consolidation will help the larger group with

Business valuation

The business valuation of the hospital is influenced by the following factors

Target hospital brand value
Location attractiveness
Bed capacity and other infrastructure
Revenue and profitability
Growth potential
Competitive position
Advantages of consolidation – synergy, efficiency etc

Here it is important to note that the acquirer should have clarity about the purpose of acquisition. The valuation should justify the long-run potential of the company considering all the factors. If not, it will create pressure on performance.

The acquirer should carefully consider all factors.

Transaction in FY 24

FY 24 has witnessed a higher number of transactions in the hospital sector as compared to earlier years. As per some reports available, Interest of private equity and Venture capital has increased by 15 times as compared to the pre-Covid period.

We have also noticed that most of the transactions have taken place for the target company in Tier II and Tier III cities, Even the strategy of the acquirer company also depicted in the same line

We have compiled major transactions executed or announced in FY 2024 along with the valuation considered per bed. No need to mention but valuation per bed is one of the criteria. It is not the only base to evaluate the effectiveness of the deal. Also, note that this is not an exhaustive list.

Transactions of hospital acquisitions in India FY 24:

Trn Month	Acquirer	Target	Location	Valuation in Cr	Number of beds	Inr in Cr /per bed	Remarks
Apr-23	Temasek	Manipal	PAN India	40000	8300	4.82	Three projects in pipe lines, Not sure whether education business is included in this or not
Jun-23	KIMS	Hiranandani group Thane	Mumbai	275	200	1.38	With real estate
Jun-23	Fortis	Medeor Hospital	Manesar	225	350	0.64	Expected to be operational in nine months
Jun-23	Kauvery Hospital	Fortis	Vedapala ni	152	200	0.76	-
Jul-23	Morgan Stanley PE	Clear Medi health	Delhi	285	300	0.95	Cancer chain - Radiation and other equipment will drive substantial business- details not known
Jul-23	BPEA	Indira IVF	PAN India	9000	NA	NA	-
Jul-23	Quadria Capital	Max vision	South and West India	1240	NA	NA	-
Aug-23	IHH healthcare	RGE	South India	1008	1500	0.67	-
Sep-23	Manipal	AMRI	Kolkata	2750	2400	1.15	Govt hold 1% in AMRI
Sep-23	TPG	AINU	South India	600	500	1.20	-
Sep-23	IndiaRF	IVY	North India	525	800	0.66	-
Sep-23	Apollo	Future Oncology	Kolkata	102	325	0.31	Under construction unit
Oct-23	Blackstone	Care	PAN India	5600	4000	1.40	-
Oct-23	Care	KIMS	Hyderabad	4800	3500	1.37	-
Oct-23	HCG	SRJ CBCC	Indore	45	50	0.90	Cancer facility with Linac
Nov-23	MGM	Malar Fortis	Chennai	128	140	0.91	-
Nov-23	Northwest Venture	Regency healthcare	Kanpur	450	700	0.64	-
Dec-23	Max	Starlit medical centre	Lucknow	940	550	1.71	Operational beds 250 , owns nursing college too
Jan-24	Shalby	Sanar	NCR	118	130	0.91	-
Feb-24	Max	Alexis	Nagpur	412	200	2.06	JCI accredited. Expandable to 350 beds
Feb-24	Yatharth	Fedilis	Faridabad	116	175	0.66	-

Expectations of future trend

We believe that future transactions will take share considering the following

Digitisation, automation, integration, and strength of the database of the target company
Emerging technology
Market in tier II and tier III cities
Value base care
Healthcare access for all
Government regulation

Conclusion

As the Indian healthcare sector continues to grow, hospital acquisitions will undeniably play a central role in shaping its future. Industry players always ensure that their acquisitions drive sustainable growth and contribute to a more robust healthcare ecosystem for all.