Why global funds are lining up to buy fertility clinics chain Indira IVF

1 in 6 Indian couples in metros grapples with infertility. Indira IVF is the largest player in the Rs 6,000-cr market that offers them a solution

Global funds have been queuing up to buy Indira IVF, India’s largest fertility clinics chain. Recent reports suggest that Baring PE Asia EQT, Blackstone, Bain Capital, Advent International and TPG Capital have submitted non-binding bids to acquire a majority stake in Indira IVF. The deal is expected to value the chain at Rs 8,000 to 10,000 crore, and the new investor is looking for a controlling stake of up to 60 per cent.

There is a good reason for such high interest in the chain. If you look at metros alone, one in six couples is affected by infertility. So, the scope for the growing market of fertility clinics in India is huge. More so now, as the Centre moves to tighten regulations for assisted reproductive technology (ART).

The government’s move will benefit the organised players the most. And of these organised players, the Rs 1,200-crore Udaipur-headquartered Indira IVF chain of fertility clinics is the largest. It currently holds a 16-17 per cent share of the Indian IVF market and runs 116 clinics across the country. For a while now it has also been looking to expand through partnerships.

Kshitiz Murdia, CEO and co-founder, Indira IVF, which is backed by TA Associates, had told Business Standard in April that more than 50 per cent of their centres are now in tier-2 and tier-3 cities and towns. “According to WHO (World Health Organisation) estimates, one in six couples (in metros) suffers from infertility in India, and so infertility is as much a rural problem as it is urban,” he had said.

The organised IVF sector, which enjoys 17-18 per cent share of the Rs 6,000-crore market, is growing at 15-20 per cent. The overall industry, which comprises single doctor clinics, unorganised players and organised chains, is growing at 12-15 per cent.

Each IVF cycle costs around Rs 1.7-2 lakh. Take into account the nine-month pregnancy period and that’s another Rs 1-1.5 lakh. Annually, India records more than 200,000-250,000 IVF cycles.

Indira IVF has identified over 600 clinics for partnership. Murdia had told Business Standard that he hoped to close 20 clinics this financial year and around 150 clinics in the next five years in geographies where Indira IVF does not have a presence. The chain is initially looking to Tamil Nadu, Andhra Pradesh and Kerala, and subsequently, the Northeast, he had said.

Indira IVF is eyeing a 20-25 per cent growth in FY24. It posted a turnover of Rs 1,205 crore for FY23, with an Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin of 30-35 per cent.

At present Boston, Massachusetts-based TA Associates owns a 47 per cent stake in Indira IVF, while the promoters hold 53 per cent. In January, Bloomberg had reported that TA Associates was looking at monetising its stake for a valuation of around $1 billion. Murdia had, however, said in April that TA Associates is not in a hurry to exit, and can stay on for another 7-8 years. “We have added more than 40 centres since the investment by TA Associates,” Murdia had said.

Indira IVF could not be reached for a comment for this article.  

The IVF industry, meanwhile, is of the view that there will be more partnerships, acquisitions and consolidation in the sector, which will ensure better compliance. Since 2018, the IVF industry has already seen investments worth $318 million from leading private equity (PE) funds and venture capitalists (VCs), shows data from Venture Intelligence.

International investment firm Verlinvest, which has earlier put in money in Indian start-ups such as WakeFit, Purplle and Epigamia, marked its first investment in the country’s healthcare sector by acquiring a controlling stake in Ferty9 fertility centre earlier this year.

Vinesh Gadhia, CEO and executive director on the board of Ferty9, said, “The Indian IVF sector is on the cusp of a major growth trajectory, and projected to reach over $1.5 billion by 2026, growing at an impressive 15 per cent CAGR. To further facilitate this evolution and maturation, consolidation is paramount.” 

He added that this is a suitable time for investment in IVF clinics as the demographic dividend is at its peak. “With regulations in place,” Gadhia said, “consolidation has begun and global investors are very bullish about India.”