Hong Kong-based private equity firm ADV Partners (ADV) has invested around $45 million (around Rs 305.7 crore) in Chennai-based healthcare company Dr Agarwal's Healthcare Ltd (AHCL), paving the way for the exit of existing investor Evolvence India Life Sciences Fund.
A major chunk of the funds will be used to fund the expansion plans of its BSE-listed eye care hospital chain, Dr Agarwal's Eye Hospital Ltd, in which AHCL holds about 75 per cent stake. This makes it one of the largest private equity investments in the eye care sector in India.
“Our Vision 2020, is to strengthen the brand and double the number of hospitals with footprints across India, Africa, Middle East and South East Asia,†said Amar Agarwal, chairman and managing director, Dr Agarwal's Group of Eye Hospitals, the holding company for AHCL and Dr Agarwal's Eye Hospital.
ADV's investment is predominantly in the form of compulsorily convertible preference shares in AHCL, a privately-held company, a statement from AHCL said.
Life Sciences-focused private equity fund Evolvence India Life Sciences Fund had acquired a minority stake in AHCL for Rs 60 crore ($12.5 million) in 2012.
The company did not disclose the amount to be given to Evolvence and only said it had made a “healthy return on its investmentâ€.
Dr Agarwal's Eye Hospital, founded by Dr Jaiveer Agarwal, has 60 eye hospitals comprising 45 in India, 14 in Africa and one in Cambodia. Its growth strategy includes entering markets such as UAE, Sri Lanka, Vietnam and Philippines.
In India, most of its hospitals are located in Tamil Nadu, Karnataka, Telangana and Andhra Pradesh, with three hospitals shortly opening in Kerala. The company recently entered the eastern market by opening a hospital in Kolkata.
In the next two financial years, Dr Agarwal's Eye Hospital will be looking at expansion opportunities in the western region of the country.
“We are looking at big entries at Ahmedabad, Rajkot, Surat, Bhuj and Baroda in Gujarat and at Aurangabad, Pune, Kolhapur and Nashik in Maharashtra,†Adil Agarwal, director, Dr Agarwal's Eye Hospital, told VCCircle.
The company is also looking at tier II and III cities in Chhattisgarh, Madhya Pradesh and Kerala, he added.
It will also be investing in eye care technology to bring in advanced global practices to service its patient base across the network.
According to a Crisil report, India’s eye care treatment market was around $2 billion between 2013 and 2014 and it is expected to grow to $3 billion by 2020.
India's eye-care segment has seen some major funding in the past years.
In 2012, Government of Singapore Investment Corporation (GIC), the sovereign wealth fund of Singapore, invested $100 million for a minority stake in Tamil Nadu headquartered eye care chain Vasan Healthcare.
New Delhi Centre for Sight Pvt Ltd, Medfort Maxivision Maxivision Group, Eye-Q Vision Pvt Ltd are the other prominent funded players in the space.
The eye-care segment has also seen emergence of not-for-profit companies such as Aravind Eye Care and Sankara Nethralaya, which provide services at a very low cost or for free.
“Health care services and delivery is an interesting and promising space and ADV Partners is excited at the opportunity to partner Dr Agarwal’s and support its growth plans in India and abroad,†said Suresh Prabhala, the Singapore based partner of ADV, who will be inducted into the AHCL board.
ADV Partners, which has offices in Hong Kong, Singapore, Shanghai and Mumbai, is making this investment from its maiden $550 million fund.
Boutique investment bank Veda was the financial advisor to Dr Agarwal's for this transaction.