Investcorp infuses Rs 316 crore in dialysis service provider NephroPlus

NephroPlus' will use the primary capital raised in this round for organic growth in India and to take its business model to other markets, starting with Southeast Asia

Global alternative asset manager Investcorp on Monday said it had invested Rs 316 crore (about $45m) in Nephrocare Health Services, which has the largest network of dialysis centres in India.

Avendus was the financial advisor to NephroPlus for the transaction.

Nephrocare, over four times larger than the second-largest dialysis service provider in the country, conducts 140,000 sessions per month in 196 centres across more than 115 cities. It manages dialysis departments of hospitals through long-term outsourcing contracts.

Over the past five years, Nephrocare has partnered with 180 top hospitals in India, including Max, Medanta and FMRI. It also acquired DaVita’s India business late last year and completed its integration earlier this year.

Earlier investors in NephroPlus include Bessemer Venture Partners and IFC (the private-sector arm of the World Bank), which will continue to stay invested alongside Investcorp. One of the earlier investors, SeaLink Capital, is exiting. The primary capital raised in this round will be used for organic growth in India and to take NephroPlus’ business model to other markets, starting with Southeast Asia.

The need for dialysis is largely unmet in India: It is estimated that only 15 per cent of over 1.2 million patients in India with kidney failures are able to access dialysis. Further, with the growing incidence of lifestyle diseases like diabetes and hypertension, the government’s own estimates suggest that over 200,000 patients are added to the patient pool every year.

Gaurav Sharma, co-head of private equity, Investcorp India, said: “NephroPlus meets every criterion we look for in an investment — outstanding founders supported by a solid team, impeccable clinical quality adherence and market leadership focused on providing access to high-quality services at an affordable price point across a large and growing addressable market. We look forward to supporting them to realise the full potential of the NephroPlus business model, both in India and abroad.”

Vikram Vuppala, founder and CEO of NephroPlus added: “Over the past decade, NephroPlus has refined its high-quality but cost-effective model to become the widest health care delivery network in India. Now is the time to grow beyond India while also cementing our leadership position in India with a continued growth momentum. Co-founder Kamal Shah and I are delighted to welcome Investcorp at this stage into NephroPlus. We selected them because of their strong global network in key markets where we intend to now focus, as well as their deep understanding and experience of investing in the healthcare space in India and across the globe in the US, Europe and West Asia.”

The present investment is in line with Investcorp’s strategy to tap into sustainable business models in the mass consumption-driven Indian market. The company eyes investment opportunities across three key sectors — healthcare, financial services and mass-market consumer — In India. Other than NephroPlus, the Investcorp Private Equity Fund II has so far invested in six companies — InCred, ASG, Zolo, Citykart, Intergrow Brands and Bewakoof.com.

Investcorp manages over $28 billion globally and at its core is a mid-market investment specialist. The private equity business of Investcorp has close to 40 years of mid-market investing experience across North America, Europe and the MENA region, with more than $42 billion of transaction value in almost 200 investments across retail, consumer products, technology, business services and industrials.