In focus: Temasek's growing healthcare ambitions in India

Singapore's state-owned investor was one of the earliest foreign investors in India's healthcare sector. Its most recent hospital deal shows the resilience of the industry's appeal.
In focus: Temasek's growing healthcare ambitions in India

Temasek’s decision to raise its stake in a well-known Indian hospital chain is a strong indication of the resilient appeal of healthcare among global private equity (PE) players.

The Singaporean state-owned investor earlier this month said it would acquire an additional 41% stake in India’s Manipal Health Enterprises, taking its total stake in the hospital chain to 59%.

This is possibly among the first healthcare companies in India in which Temasek has acquired a controlling stake, according to people familiar with the deal.

The deal was valued at about $2 billion, according to local media reports, making it one of the biggest PE deals in Indian healthcare as well.

“At Temasek, we continue to seek opportunities in India that are aligned with our views on structural trends shaping the future. This includes our focus on longer lifespans, which looks at how healthcare can address the growing needs of longevity,” the investment fund said in a statement to AsianInvestor.

Manipal Health Enterprises, India’s second-largest hospital chain, has expanded rapidly in the past few years.

In 2021, it acquired two hospital chains -- Columbia Asia and Vikram Hospitals -- along with diagnostics company Medcis Pathlabs -- and currently serves over five million patients a year through its 29 hospitals in 16 cities.

It is also closing in on a deal to acquire another hospital chain KIMS Health, local media reports said.

Temasek's desire to acquire a majority stakein Manipal Health is driven by its clinical excellence and the ability to cater to different medical specialities, according to people familiar with the deal.

They noted that Temasek is unlikely to participate in day-to-day operations,  but is likely to engage with the company at the board level.


The Temasek-Manipal Health deal is part of a rising trend of private-equity-led buyout deals, according to experts.

“Over the last decade, India has seen a growing trend of decoupling of shareholding and management. This is increasingly true even for companies majority owned by promoters or families, thereby presenting attractive opportunities for PE-led buyouts,” said Haresh Vazirani, senior investment director of private equity at abrdn.

KIMS Hospitals, Aster DM Healthcare, Care Hospitals, Sahyadri Hospitals are among Indian hospital chains that have raised capital from PE investors, Vazirani said.

The sector has started seeing consolidation which is resulting in emergence of players with meaningful scale and dominance, said Ankit Poddar, director at Mumbai-based Candle Advisors.

“The top hospital chains in India are now either listed on public markets or are owned by PE funds and fairly consolidated,” he said.

Most of these players had PE investors taking a majority or minority stake for a few years, said Poddar. It resulted in these businesses becoming more professional –a key driving factor for buyout funds in their investment decisions, he added.


The sector, in particular, came into the spotlight during the Covid-19 pandemic: with demand for hospital services outstripping supply, hospitals gained flexibility to raise prices and pass on costs, with earnings rising by 5 percentage points, Minyue Liu, investment specialist for Asian equities at BNP Paribas Asset Management told AsianInvestor.

Hospitals are expected to be the biggest beneficiaries in rising healthcare spends in India, according to a March research report by domestic brokerage Prabhudas Lilladhar.

Overall healthcare spending is expected to grow by a compound annual growth rate of 16-18%, driven by improving affordability, ageing population and increasing incidence of lifestyle diseases.

Private hospitals are expected to be the largest winners, accounting for up to 70% of healthcare spending.

Unlike most countries where public spending dominates the industry, India’s private sector accounts for 70-75% of healthcare spending, hence new investments will largely be driven by private firms, the report said.

Temasek was part of the largest fundraise in eyecare in India in 2022. Image credit: Shutterstock


Nevertheless, hospitals are, nevertheless, only one sub-sector within healthcare that appeals to Temasek.

The Singaporean investor has also invested in the pharmaceuticals and therapeutics in India.

Many of Temasek’s recent healthcare deals in India have happened iin conjunction with or via Sheares, a wholly owned subsidiary. This includes the recent Manipal transaction.

Other interesting deals by Temasek include a $73 million investment in Medica Superspecialty Hospital in 2022, replacing a consortium led by PE firm Quadria.

Temasek also participated in a $128 million funding round for eyecare chain Dr Agarwal’s Health Care in May 2022, after previously investing about $33 million in the company in 2019. The 2022 fundraise was the largest in the eyecare industry in India.

Candle Advisors’  Poddar said that Sheares is looking at expanding its franchise in India.

Sheares is looking at raising its stake in Medica to 90%, local media reports said earlier this month.

Other investments by Temasek in Indian healthcare include pharmaceuticals-focused platform Integrace, digital pharmacy startup PharmEasy and physical fitness platform Curefit.

One person familiar with Temasek’s operations said the state-owned investor has been investing in India’s healthcare space since the early 2000s and was among the sector’s earliest foreign investors.

India remains very much on Temasek’s radar: It is now seeking investment opportunities beyond the $1 billion it has invested annually in the country (across various sectors) over the past six years, Ravi Lambah, head, investment group and head of India at Temasek, said to The Economic Times in an interview earlier this month.


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