India’s largest private sector fund ICICI Venture has sold off 30% of its stake in hospital chain Krishna Institute of Medical Sciences to its competitor General Atlantic worth Rs 850 crore. Through this deal, the company is expected to make close to four-fold returns on its initial investment in four years.
The valuation of the Hyderabad based hospital chain has been raised to around Rs 2,700 crore from Rs 850 crore in 2014. In 2014, ICICI Venture had invested about Rs 220 crore in the hospital chain, which had around 500 beds.
The hospital chain KIMS, which had received the SEBI approval for a public offering had to postpone its share sale plan because of the regulatory changes and pricing uncertainty. KIMS has stated that the regulatory challenges were one of the reasons for the adverse impacts on the business.
“Reforms in the healthcare industry and the uncertainty associated with pharmaceutical pricing, reimbursement and related matters could adversely affect its business and results of operations,’’ the company said in its public offer document.
The hospital chain from the past few years has been expanding and growing the business with the help of insurance coverage sponsored by the government. The aim of all the sponsorship has been future growth and expansion and also to improve the healthcare and medical facilities.
“Higher volume growth, primarily from a larger aging population, urbanisation, rising affordability of private healthcare services, and steadily increasing bed capacity in under-penetrated areas are helping draw local business houses, foreign PE funds and hospital chains to acquire existing hospital services companies,” stated a Goldman Sachs report.
Established in 1984, the Krishna Institute has its headquarters in Hyderabad. Through all the acquisitions and investments, the hospital chains in India have been just aiming to increase growth and provide proper facilities to the people of the country without complaints.