Sabre Capital to up healthcare fund size

Private Equity firm Sabre Capital is expanding its healthcare corpus from Rs 250 crore to Rs 400 crore, which will be invested through its subsidiary Spring Healthcare.

The corpus has close to 60 per cent participation from domestic banks and insurance players, while the rest is being provided by Sabre Capital and its international partners.

Spring Healthcare is the third fund or investment portfolio of Sabre Capital, which was set up in 2002 by Rana Talwar and Rajiv Maliwal. Maliwal is the present chairman of Spring Healthcare.

The private equity firm has got commitments from two of the top six Indian banks. And, six other banks are scheduled to discuss investments in the fund.

 

Spring Healthcare is not just a private equity fund. It has been structured as an investment and operating company. While investing, Spring Healthcare will also provide consultation and operational expertise. The firm will soon enter into a tie-up with one of the top three hospitals in the US that will look into the consultation and operation aspects. The fund will invest in hospitals, clinical research organisations, diagnostic chains and speciality clinics.

“In the next three-four weeks, we should be able to close this. These hospitals will play a role in areas like hospital management, getting second opinion on medical issues. telemedicine etc, and help the firm connect internationally,” said Maliwal.

Spring Healthcare would not take over 49 per cent stake in any company as the plan was to invest Rs 50-75 crore per firm, he added.

“In the last year or so, we have seen 40-50 hospitals and have given term-sheets to two of them. We also have five proposals in the clinical research area. We will sign for at least one or two investments by the end of this year,” said Maliwal.

So far, Spring Healthcare has invested in Pune-based Oyster and Pearl Hospitals, a chain that specialises in women and child care, and invitro fertilisation labs. “Healthcare is a very interesting space, which is growing at a fast pace. While the hospital industry is worth $21 billion, clinical research is a $300-million industry. The cost of clinical research in India is one-tenth of that in the US,” said Maliwal.

Sabre Capital is expecting a 25 per cent internal rate of return (IRR) from its healthcare portfolio.

With regard to an exit route, Maliwal said either the firms under Spring Healthcare could go for individual listing, or they might list Spring Healthcare itself.

“We are in for a long haul and plan to stay invested for five-seven years,” he added.

After its inception in 2002, Sabre Capital started off by focusing on the financial sector. The firm invested close to $400 million across its financial portfolio. Between 2002 and 2006, the firm acquired four banks and merged them into Centurion Bank. It also started an asset reconstruction company called IARC. Centurion Bank and IARC were later acquired by HDFC.

Its second fund Sabre-Abraaj Capital was of $100 million with Dubai-based Abraaj Capital. It has invested in infrastructure firms like Ramky Infrastructure, ECI Engineering and Man Infraconstruction. “Our investments have been very focused. In this, we were sure not to invest in developers. One of our funds will hit the market soon, and the other two will take the IPO route in a couple of years. With the first IPO itself, we will be tripling our investment. We are expecting over 30 per cent IRR,” said Maliwal.