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Private equity firms have acquired a significant stake in India's $80 billion hospital sector, reshaping the industry and attracting global investors such as Temasek, TPG, and KKR. The Covid-19 pandemic marked a turning point in the sector, with large acquisitions including Manipal and Max Healthcare. Analysts remain positive about growth prospects due to rising life expectancy, incomes, and health awareness, but note that private equity investments have short horizons and may not fully support long-term asset creation cycles in healthcare infrastructure.

The private hospital sector in India has witnessed a significant shift towards ownership by global private equity (PE) firms in the past five years, particularly since the onset of the Covid-19 pandemic. This trend is transforming the healthcare market, with notable investments from firms like Temasek, TPG, and KKR [1].

The $80 billion Indian private hospital industry, once dominated by government institutions and family-run setups, is now seeing a major ownership shift. While sporadic PE deals in hospitals date back to 2007, the pandemic marked a turning point, attracting sustained interest from funds such as Singapore’s Temasek and US-based TPG and KKR [1].

Abhay Soi, chairman and managing director of Max Healthcare, noted that PE investments in healthcare typically follow a three-to-five-year horizon, after which ownership often reverts to corporates or individuals. While PE brings funds to drive consolidation and provide last-mile financing, their investment horizons are often too short to fully support long-term asset-creation cycles that healthcare infrastructure demands [1].

Recent deals illustrate the scale of PE control: Blackstone owns 80% in KIMS Kerala and 73% in Care Hospitals, Temasek holds 59% in Manipal Hospitals, while Arpwood Partners and OTPP have taken full ownership of Sterling and Sahyadri Hospitals respectively. Other global players such as CVC Capital, General Atlantic, TPG Growth, BPEA EQT, and Advent International have also built significant stakes across leading hospital chains [1].

Analysts remain positive about growth prospects due to rising life expectancy, incomes, lifestyle-driven non-communicable diseases, and health awareness. However, they caution that private equity investments may not fully support long-term asset creation cycles in healthcare infrastructure [1].

The industry shift in India mirrors the US, where most hospitals are privately or institutionally owned, contrasting with the UK's public healthcare system through the National Health Service [1].

References:
[1] https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/global-pe-firms-tighten-grip-on-indias-80-billion-hospital-sector/articleshow/123469753.cms