ICICI Venture is planning to float a company that will buy medium-sized hospitals and pharmacy chains and act as a holding company for the fund’s investments in the booming healthcare sector. India’s largest domestic PE fund has already decided to allocate $250 million to the holding company, which will be set up over the next one month.
According to Renuka Ramnath, CEO and MD of the fund, temporarily called I-Ven Medicare, the company will be the lead vehicle for all ICICI Venture’s investments, buyouts in the healthcare space.
ICICI Venture is in talks with four hospitals in different parts of the country for a complete buyout. They are also examining proposals from other small and medium-sized hospitals across the country who need funds.
India’s healthcare sector has boomed in recent years. A CII-McKinsey study estimated that India will spend $45.6 billion on health in the next five years. ICICI Venture’s approach towards investing in the healthcare sector is different. They want to build a healthcare platform that will control a variety of healthcare players. They believe this to be the appropriate strategy for the sector.
The new company’s plan is to take majority stakes in key regional hospitals and thereby become a large healthcare player. The company hopes to use its large balance sheet and size to buy equipment, help the hospitals raise money and hire doctors. The new company proposes to list itself on the stock exchanges in a few years. Ms Ramnath added that value creation for investors will be immense.
According to Aluri Srinivasa Rao, director investments, ICICI, the company will focus on medium-rung players looking for money to expand.