The Abraaj Group, a leading investor in global growth markets, and UK-based CDC, a development finance institution, will make a $17.5 equity investment in Rainbow Hospitals, a 450-bed paediatric and maternity healthcare business in India.

This is CDC’s first direct equity investment in India since the launch of its new strategy in late 2012. The investment also builds upon Abraaj’s long-standing partnerships with healthcare institutions in South Asia and represents its sixth healthcare investment in the region.

Dr Ramesh Kancharla, chairman and managing director, Rainbow Hospitals, said: “This investment lets us expand and develop our high-quality medical facilities, allowing us to replicate the successful pioneering model across the country, including in cities such as Bangalore, Chennai and Pune.”

“In parallel, we would also like to develop tertiary paediatric care in tier two cities like Vizag and Kurnool. The current investment would give us the capacity to expand the number of beds available to patients from the current level of 450+ to close to 1000 by 2017.”

“The patient investment approach taken by CDC and Abraaj gives us the space to focus on the longer-term business quality and performance essential in multi-specialty paediatric care,” he added.

Srini Nagarajan, CDC’s regional director for South Asia, said: “This is an exciting first direct equity investment in India for CDC. Rainbow is a company with great financial and development potential. Its management team has already made it a leader in paediatric care in India and a centre for high-quality training and research and we will work closely with the company to give them the long-term capital and support they need to build the business.”

“With employment in the group currently at around 1,000 people, we expect this to grow as much as four times over the course of our investment, led by the rapid growth in the Indian healthcare market. With demand expected to grow at around 15 per cent per annum over the next decade, it’s clear that the gap in provision of healthcare in India will need to be plugged by the private sector,” Nagarajan noted.

“We’ll help the business develop its plan to become a national centre of excellence for the teaching of paediatric medicine and for helping other institutions to deliver quality care – with a focus on lower income groups. And we’ll also focus on building Rainbow’s value by strengthening its environmental, social and governance standards.”

Rainbow currently has its two largest hospitals certified with the Indian quality seal of the National Accreditation Board of Hospitals (NABH). The NABH demands high standards for hospitals, for example with regard to medical care and patient care as well as corporate governance.

Veda Corporate Advisors acted as the sole advisor to Rainbow Hospitals and its promoters. Veda is a leading mid-market focused investment bank offering advisory for private equity fund raising and M&A. - TradeArabia News Service