Paras Healthcare raises $42M from PE firm Creador's affiliate

Guragaon-based healthcare provider Paras Healthcare has raised $42 million (Rs 275 crore) through an affiliate of private equity (PE) firm Creador III LP (Creador). The fund will primarily be used for expansion and growth across different regions.

A press statement released by the company said that with this capital, Paras Healthcare, which has 730 beds across hospitals, aims at achieving its expansion plans and supporting the existing units for capacity expansion. The exclusive financial advisor for this transaction was Avendus Capital, and Khaitan & Co was the legal counsel.

Started in 2006 by Dharminder Nagar, Paras Healthcare presently has two divisions– Paras Hospitals at Gurgaon, Patna and Darbhanga, providing specialised tertiary care, and Paras Bliss at Panchkula and New Delhi, providing specialised mother and child care.

On the investment, Anand Narayan, Managing Partner, Creador Advisors India LLP, notes that Paras Healthcare is a differentiator in the healthcare segment, as it targets the middle-class segment and provides the best healthcare at affordable prices.

He adds that in a scenario where more than 70 percent of the healthcare costs are currently paid out of pocket, the vision and operational aspects of Paras Healthcare are relevant.

“Moreover, their presence in Bihar already elucidates their aim and execution capabilities of providing quality super specialty medical care even in the hinterlands of the country. We look forward to assisting Paras in their next phase of growth,” adds Anand.

Dr Nagar adds that most of the oldest cities in North India have the weakest healthcare infrastructure. "Each hospital of Paras aims at being a community player by empowering the common man, the middle class, with access to specialised care at locations that has limited or no specialised healthcare facilities. Our endeavours in Bihar illustrate our ideation," he says.

The company statement added that Paras Healthcare has commissioned two units of 220-bed tertiary care hospital with comprehensive cancer care, Paras Hospitals at Panchkula, and a 50-bed mother and child care centre, Paras Bliss, at Noida.

They aim to add over 1,000 beds presently through a mix of new greenfield, leased and acquisitions. The announcements shall be made over the course of the current and next financial year.

The healthcare market is believed to be worth close to $100 billion and is poised to touch $280 billion by 2020.

Paras Healthcare believes that India requires 600,000-700,000 additional beds over the next five to six years, indicative of an investment opportunity of $25-30 billion. Given this demand for capital, the number of transactions in the healthcare space is expected to witness an increase in the near future.

The government of India is also set to launch India's universal health plan, which aims to offer guaranteed benefits to a sixth of the world's population, and will cost an estimated Rs 1.6 trillion ($ 23.72 billion) over the next four years.

In December 2015, Bengaluru-based ObGyn hospital chain Cloudnine raised Rs 400 crore ($74 million) from India Value Fund Advisors (IVFA) for a minority stake. It was the third round of investment made in the hospital chain. Cloudnine had earlier raised $16 million by Sequoia India and its existing investors Matrix Partners India.

In 2013-14, the estimated healthcare expenditure in India was $96.3 billion, which constituted almost five percent of the GDP. With a growth rate of approximately 12 percent, this number is expected to cross $195 billion in the next three years. However, according to records, India has only 0.6 doctors per 1,000 people. Additionally, many believe that technology is yet to hit the medical devices segment.

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