Singapore’s state-owned investor Temasek is seeking to increase its penetration of India’s healthcare sector by snapping up a 33% stake in India’s biggest hospital chain Manipal Health, giving it a 51% controlling stake.
Temasek is looking to acquire an 8% stake owned by India’s quasi-SWF the National Investment and Infrastructure Fund (NIIF) as well as a 10% stake from private equity fund TPG Capital Management, according to Economic Times. NIIF acquired its stake last April for INR21 billion (US$273 million) via its Strategic Opportunities Fund.
Temasek is reportedly looking to spend INR132 billion (US$1.6 billion) for the 33% stake, valuing the hospital chain at INR400 billion (US$4.8 billion)
If the deal goes ahead, it builds on Temasek’s growing portfolio of healthcare assets in India. Last year, it invested INR6 billion in Medica Superspecialty Hospital, replacing a consortium led by Asian private equity investor Quadria and Europe-based co-investors DEG and Swedfund. The consortium held around 67%, but Temasek’s holding is more than that.
Temasek is also a longstanding backer of Chennai-based Dr Agarwal’s Healthcare, investing INR2.7 billion last year for a minority stake in the eye-care hospital chain. The investment is being used to forge strategic partnerships, acquisitions and new hospitals. The group is targeting doubling hospitals to 150 in by 2027 from 76 in 2022.
Other investments in the Indian healthcare sector are focused on pharmaceuticals with Temasek backing pharmaceuticals-focused platform Integrace, e-pharmacy startup PharmEasy, Glenmark Pharmaceuticals, and physical fitness platform Curefit.
Investing in India's healthcare space since 2004, Temasek has been one of the sector’s early foreign investors. Over the past decade, it has committed approximately US$500 million in healthcare-related investments.
India’s healthcare sector is a fast-growing market with 80% controlled by the private sector. Rising household incomes are driving the private healthcare sector, although a significant amount of spending is from out-of-pocket expenditure rather than insurance.
State-owned investors have tended to invest in India’s thriving biotech and pharma sector with ADIA and Temasek the leading players in the sector. Yet, hospitals have not drawn the same level of interest, despite the huge market potential with the healthcare market set to exceed US$400 billion by the end of the decade – a four-fold increase from 2020.
Growth in private healthcare is being stimulated by the “Modicare” plan, named after Prime Minister Narendra Modi but officially known as the National Health Protection Mission (NHPM). With the aim of insuring 40% of India’s burgeoning population through state support, beneficiaries include those who were previously marginalized by the healthcare system, such as deprived members of Scheduled Castes and Scheduled Tribes. Modicare is set to boost private health provision in provincial cities, creating the basis for growth in hospital provision that SOIs are likely to capitalize on.
R Venkatesh, Temasek’s Managing Director for India, previously said Modicare is an “inflection point for India’s healthcare system”. He added, “It is unrealistic to expect the infrastructure to physically grow to keep pace with the likely patient growth as a result of Modicare,” says Venkatesh. The solution, he believes, is to overcome existing constraints by using technology to deliver quality healthcare.
