Tata Cap healthcare fund eyes Rs 600 cr investments

Tata Capital, the private equity and financial services arm of the Tata group, is looking at over Rs 600 crore investments for its standalone healthcare fund. The Tata Healthcare Fund will look at taking minority stakes in fast-growing healthcare and pharma companies in India. This fund, which is starting to find its feet, is spearheaded by Visalakshi Chandramouli, who was with Merrill Lynch and Cipla Pharmaceuticals earlier.

The domestic component of the fund is understood to have been assigned a target size of up to Rs 200 crore. The offshore component of the fund is being co-partnered by Tata PE along with HBM Partners, a Switzerland-based global investor in early-stage life sciences and healthcare companies. This offshore fund is expected to mop up $70-100 million (Rs 325-465 crore), according to investment bankers.

The fund is understood to be considering investments with ticket sizes in the range of Rs 25-65 crore in unlisted healthcare and pharma companies. Tata Capital had last year announced plans to raise private equity funds to the tune of $350-400 million (Rs 1,625-1,857 crore), with some of the proceeds allocated towards setting up a standalone healthcare fund. The company declined to comment on the fund's planned investments, or when it intends to close investor rounds for the healthcare fund.

The vast potential for outsourcing in the healthcare sector and the growing volumes of contract research outsourcing in the pharma sector are seen as opportunities by the fund. Hence, it will look at investing in small contract research outfits and diagnostics firms.

Recent media reports have suggested the fund is likely to invest $8-10 million (Rs 37-46 crore) to pick up minority stakes in healthcare firms Intas Biopharmaceuticals Ltd (IBPL) and NovaLead Pharma, the demerged R&D division of VLife Sciences Ltd. Both these firms have Kotak Private Equity as an investor. However, this could not be independently confirmed.

NovaLead Pharma develops small drug molecules with multiple mechanisms of action to treat diseases. The company's pipeline has a mix of new chemical entities and new indications for US Food and Drug Administration-approved drugs with an addressable market estimated at over $15 billion (nearly Rs 70,000 crore). According to reports, the firm has an R&D pipeline of about 11 molecules for various diseases like colon cancer, malaria, leukemia and diabetic cataract.

Tata Capital has been looking to create various funds under such themes as mid-market, distressed assets, healthcare and innovation.