Indian hospitals are the new goldmine for deep pockets. Besides a rush of investment, a high-intensity consolidation is ongoing in India’s hospital space.
As per an ET report based on information from sources, IPO-bound Manipal Health Enterprises is leading the race to acquire Sahyadri Hospitals with a Rs 6,838 crore ($800 million) bid.
Global investment firm Blackstone is a close second, sources said. IHH Healthcare-backed Fortis Healthcare and EQT Partners also submitted bids on June 23, which was the last day to submit binding financial bids.
The Pune-headquartered hospital chain, which operates 11 facilities across Pune, Nashik, Ahilya Nagar and Karad, comprising 1,300 beds, 2,500 clinicians and 3,500 support staff, is owned by Canada’s pension fund Ontario Teachers’ Pension Plan (OTPP), which had acquired Sahyadri from Everstone Capital in August 2022 at a valuation of around Rs 2,500 crore, outbidding Max Healthcare. Everstone had bought the hospital chain three years earlier in 2019 from its founder, neurosurgeon Charudutt Apte, for about Rs 1,000 crore.
The big money chasing Sahyadri for past several years is emblematic of the attraction Indian hospitals, especially smaller chains, have come to hold in recent times.
Small-town hospitals are pulling big money
Bulge-bracket private equity funds are increasingly investing in single-specialty Indian hospital chains that present a robust growth potential in emerging consuming centers, significantly widening the addressable market beyond their traditional metropolitan bailiwicks, ET had reported in April.
Non-metro locations, such as Lucknow , Vizag, Jaipur, Cochin, Siliguri, Guwahati, Bhubaneswar and Patna, private equity investors believe, hold great growth potential in healthcare, in lockstep with an increasing affordability quotient in tier- 2 or 3 towns, and a greater availability of qualified doctors and specialists. PE funds are looking for players that will give higher returns – and blockbuster exits when the investments run their course.
“A trifecta of factors is helping accelerate investor interest in the single specialty healthcare chains including significant growth opportunity in tier 2/3 cities, clearly visible unit economics and viability with best in class ROIs,” Vishal Bali, executive chairman, Asia Healthcare Holdings (AHH), a leading healthcare investment platform, with focus on single specialities like oncology, women and child care, fertility, urology and nephrology, had told ET. “AHH has been the inflection point for Single speciality healthcare with all our companies in single speciality healthcare delivering consistent growth in revenues, ebitda and geographical reach along with ROIs” he said.Parking PE monies in treatment areas such as IVF, nephrology, eye-care, oncology, mother & childcare among others, have become a credible prescription for future value creation, after nearly a decade-long hunt for multi-speciality assets across the country. According to an analysis done by Avendus, single-speciality hospitals account for over 40% of all PE investments in healthcare since 2019. This was just a bit over 15% between 2015 and 2018. Between 2020 and early 2025, the segment recorded 24 PE/VC investments totalling $1.8 billion, with 19 of those deals worth $1.2 billion closing in the last two years alone, shows data put together by Grant Thornton.
Billions of dollars pour into hospital sector
Over the period of two years from 2022-24 Hospitals in India have become one of the preferred investment destination for Investors, attracting net investment of $4.96 billion from Private Equity and $3.2 billion through Foreign Direct Investment (FDI).
As per a report prepared by consultancy firm Grant Thornton Bharat in collaboration with the Association of Healthcare providers of India (AHPI), from 2022-24 hospitals in India undertook M&A deals worth $6.74 billion and attracted $4.96 billion from Private Equity (PE) investors. During the period, hospitals also raised $466 million through Initial Public Offering (IPO).
The report which analysed 594 M&A and private equity transactions that took place during the period states that, “Hospitals require diverse funding solutions to sustain growth, ranging from equity financing, debt financing, and foreign direct investment (FDI) to public-private partnerships (PPPs).” As per the investment analysis, the top three investment via PE route includes: Temasek Holdings $2 billion investment in Manipal Health (2023); $656 million by BPEA EQT in Indira IVF (2023); and lastly Blackstone Group $591.1 million investment in Quality Care (2023).
A recent big deal was by a New York-based global private-equity and investment company, KKR, which in February bought a controlling stake in leading cancer care hospital chain Healthcare Global (HCG) from private equity peer CVC Capital Partners for nearly $400 million. By acquiring Baby Memorial Hospital last year, KKR made a comeback to the sector after one of its biggest paydays in India exiting Max Healthcare two years ago.
Deal-making in India’s healthcare sector has surged in recent years, with hospitals now commanding the largest share of foreign direct investment (FDI) within the sector, TOI had reported in December.
In FY24, hospitals accounted for 50% of the FDI in total healthcare, translating to $1.5 billion. This marks a significant increase, as the share of hospitals in healthcare FDI has more than doubled from 24% in FY21, and has been rising from 43% in FY20, underscoring their growing prominence. The trend also reflects a strengthening investor preference for hospitals, alongside the traditionally favoured pharmaceuticals sector.
The strong private equity interest in India’s healthcare services companies is a highly credible indicator of the multi-decade growth potential inherent in the sector, as per a top executive at European investment bank Rothschild & Co.
“We expect to see expansion of interest as international players evaluate the market and get more comfortable with the domestic landscape,” Hedley Goldberg, partner and global head of healthcare services at Rothschild & Co, told ET in an interview in January.
Besides a number of private equity deals, the hospital sector is also attracting big Indian businesses. While several corporates such as Tata, Birla and Hinduja have a presence in healthcare, none has made a significant pan-India presence.
But the Bajaj Group is preparing to enter the healthcare sector by setting up a chain of hospitals in metros across the country., ET had reported last year. As per Bloomberg, it has earmarked Rs 10,000 crore as an initial investment.
In recent years, healthcare companies and hospitals in India have been increasingly focussing on acquiring buildings and properties to expand their operations and strengthen their market presence.
This trend is driven by the rising demand for quality healthcare services in urban and semi-urban areas, fuelled by a growing population, increasing health awareness and better insurance coverage.
Hunt for stressed assets
In December last year, billionaire Mukesh Ambani’s Reliance Industries acquired technology-driven and oncology-focused healthcare platform Karkinos for Rs 375 crore. Reliance bought it under the Insolvency and Bankruptcy Code (IBC). The healthcare sector, particularly hospitals, witnessed major expansion during the Covid-19 pandemic.
However, after the situation eased, it became difficult for many standalone hospitals to sustain their businesses. Such hospitals have been seeing interest from two sets of bidders — those already in the industry and seeking to expand and those who want to turn around such entities before they sell to someone else.
Promoter-driven strategic investment firms and hospital operators are scouting for stressed healthcare assets that they can acquire through the insolvency and bankruptcy process, as private equity firms often edge them out in the race for good assets by offering lofty valuations.
Why India’s hospital sector has turned so hot
Historically, the pharmaceuticals sector, including APIs (active pharmaceutical ingredients), has been the investor favourite, attracting multi-billion-dollar deals. However, post-Covid, the hospital and diagnostics sector has come into the spotlight, drawing a wave of investors.
The Indian hospital sector market cap surged 9x from Rs 37,500 crore in FY20 to Rs 3.5 lakh crore, brokerage firm JM Financial said last year in July. At a time when the sector was grappling with inefficiencies, high leverage and low ROCEs, Covid provided a much-needed impetus. This came from improved pricing, higher insurance coverage and dedicated shift towards complex surgeries such as transplants.
India’s top listed hospital chains performed well in the stock market leading up to this year. Apollo Hospitals’ shares climbed 28% in 2024, while Max Healthcare Institute Ltd. soared 64%. The Indian hospital industry is poised to post a healthy compound annual growth rate (CAGR) of about 12% over the next three fiscal years, credit rating agency CareEdge Ratings said last year.
Growing incidence of lifestyle diseases and easing demand for affordable health care delivery are driving the healthcare market in India. A report released last year by HSBC Global Research on India hospitals said seven listed hospitals will add 14,000 beds in the next 3-5 years.
A total of 22,000 new beds is expected, including those by other private hospital chains. Even with these additions, there will be no over-supply of beds in India.
The report said that the addition of beds is triple the number of beds added between FY19-24 at 4,000. Most hospitals are now in a consolidation phase and planning to expand and add sees growth opportunities after making profits between FY19-24 because of low capex.
A World Health Organisation (WHO) report said last year that India has only 16 beds per 10,000 people, which is abysmally low if compared with most of the developed and emerging markets.
India requires 100,000 additional beds in the next 5-7 years just to meet its healthcare demand on the back of increasing non-communicable diseases such as diabetes, cardiac disorders, and cancer., as per the HSBC report. The government’s push to turn India into a global healthcare hub by promoting medical tourism is another strong growth driver for the hospital sector.
