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Outlook Business quotes Venture Intelligence data in an article titled Change Of Heart covering the recent good exits by PE/VC funds in the Healthcare segment and trends going forward.
"there have been 24 PE exits worth $720 million in 2015, the highest since 2011, according to Venture Intelligence. Many of the exits have been via IPOs."
"PE exits through IPOs have yielded returns as high as 4.53x — when Ridgeback Capital sold its stake in Granules India in 2015. Thyrocare Technologies, whose IPO in May this year yielded a return of 3.5x for CX Partners, seems like it was a matter of good timing."
The IPO of Narayana Hrudayalaya, a multi-specialty hospital chain, also generated significant interest and was eventually oversubscribed around 8x.
"The private sale of Intas Pharmaceuticals by ChrysCapital to Temasek Holdings got returns of 17.6x, much higher than the public exit of Baring India from Indoco Remedies at 5.2x, according to Venture Intelligence."
Trends in the Sector:
- The continuing positive IPO market can see more Healthcare IPOs being lined up - e.g. VLCC (backed by Everstone), New Delhi Centre for Sight (backed my Matrix Partners) and Aster DM Healthcare (backed by Olympus Capital and India Value Fund).
- Regulatory risks, apart from creating another barrier to entry, will also impact valuations of players who haven’t had years of experience in the space. This provides opportunities for identifying companies that have good systems and processes in place.
- Investor attention to chase sub sectors like diagnostics, which have high RoI potential, and not hospitals which have high gestation period and depressed RoC and RoE.