CDC, a UK-based development finance institution and The Abraaj Group, an investor in global growth markets, have made an investment in Rainbow Hospitals. No financial terms were disclosed. Based in India, Rainbow Hospitals is provider of specialized pediatric and maternity care. Veda Corporate Advisors served as exclusive advisor for Rainbow Hospitals in the transaction.
August 13, 2013, Hyderabad, India: CDC, the UK’s development finance institution and The Abraaj Group (Abraaj), a leading investor operating in global growth markets, today announced their investment in Rainbow Hospitals, a 450-bed paediatric and maternity healthcare business based in the southern Indian state of Andhra Pradesh.
This is CDC’s first direct equity investment in India since the launch of its new strategy in late 2012. The investment also builds upon Abraaj’s long-standing partnerships with healthcare institutions in South Asia and represents its sixth healthcare investment in the region.
Established in 1999, Rainbow Hospitals is India’s largest specialized paediatric and maternity care company with four maternity, paediatric and neonatal intensive care units, and one outpatient clinic in Hyderabad. The business has expanded with four centres added in the last six years and intends to develop beyond the state of Andhra Pradesh, with new hospitals planned for cities such as Bangalore, Chennai and Pune, and tier two cities like Vizag and Kurnool.
Rainbow currently has its two largest hospitals certified with the Indian quality seal of the National Accreditation Board of Hospitals (NABH). The NABH demands high standards for hospitals, for example with regard to medical care and patient care as well as corporate governance. Rainbow also won “Best Children’s Hospital” by CNBC and ICICI Lombard in 2010 and made the top-5 children’s hospitals in India from “The Week” Hansa survey in 2010, 2011 & 2012. Rainbow’s Promoter and Founder is Dr Ramesh Kancharla who worked at King’s College Hospital and Great Ormond Street Children’s Hospital in London before returning to Hyderabad to establish Rainbow hospitals.
Welcoming the investment, Dr Ramesh Kancharla, Chairman and Managing Director, Rainbow Hospitals, said: “This investment lets us expand and develop our high-quality medical facilities, allowing us to replicate the successful pioneering model across the country, including in cities such as Bangalore, Chennai and Pune. In parallel, we would also like to develop tertiary paediatric care in tier two cities like Vizag and Kurnool. The current investment would give us the capacity to expand the number of beds available to patients from the current level of 450+ to close to 1000 by 2017.”
Dr Kancharla added, “The patient investment approach taken by CDC and Abraaj gives us the space to focus on the longer-term business quality and performance essential in multi-specialty paediatric care.”
Srini Nagarajan, CDC’s Regional Director for South Asia, said: “This is an exciting first direct equity investment in India for CDC. Rainbow is a company with great financial and development potential. Its management team has already made it a leader in paediatric care in India and a centre for high-quality training and research and we will work closely with the company to give them the long-term capital and support they need to build the business.
“With employment in the group currently at around 1,000 people, we expect this to grow as much as four times over the course of our investment, led by the rapid growth in the Indian healthcare market. With demand expected to grow at around 15% per annum over the next decade, it’s clear that the gap in provision of healthcare in India will need to be plugged by the private sector.
“We’ll help the business develop its plan to become a national centre of excellence for the teaching of paediatric medicine and for helping other institutions to deliver quality care – with a focus on lower income groups. And we’ll also focus on building Rainbow’s value by strengthening its environmental, social and governance standards.”
Balaji Srinivas, Managing Director at The Abraaj Group, added, “There is a pressing requirement in the Indian healthcare sector for paediatric healthcare infrastructure due to the demographics of the country, which witnesses high fertility, maternal and infant mortality rates. The private sector has a critical role to play in helping to reduce fatalities and improve healthcare facilities through targeted investments.
Under its new strategy, announced in September 2012, CDC now provides direct debt and equity investment to businesses in South Asia and Africa as well as continuing to act as a fund-of-funds investor. From 2004 – 2010 CDC operated primarily as a fund-of-funds investor, investing in companies through intermediary fund managers.
Veda Corporate Advisors acted as the sole advisor to Rainbow Hospitals and its promoters. Veda is a leading mid-market focused investment bank offering advisory for private equity fund raising and M&A.
About Rainbow: Rainbow Hospital, a leading chain of hospitals for women and children’s health care in India in existence for the last 13 years, is managed by fulltime professional medical team with a core philosophy of TEAM WORK. Today we were able to not only bench mark paediatric multispecialty concept but has shown the need of multispecialty children’s hospitals in the country. The Rainbow Hospital runs one of the largest training programme in the country with a 42 young doctors in training at any given time under various post graduate programmes such as DNB Paediatrics, DNB Neonatology and Fellowship programme in pediatric intensive care and neonatology.
CDC is the UK government-owned development finance institution that uses its own balance sheet to invest in the developing countries of South Asia and Africa. It has net assets of £2.8bn.www.cdcgroup.com, CDC’s mission is to support the building of businesses in the poorest countries, creating jobs and making a lasting difference to people’s lives in some of the world’s developing countries. Under its recent business strategy, announced in September 2012, CDC provides debt and direct investment to businesses as well as acting as a fund-of-funds investor. CDC also now only makes new investment commitments in Africa and South Asia. The strategy is available at: http://www.cdcgroup.comhttps://d16yj43vx3i1f6.cloudfront.net/uploads/cdcstrategypresentation_2012.pdf
THE ABRAAJ GROUP
The Abraaj Group is a leading investor operating in the growth markets of Asia, MENA, Turkey and Central Asia, Sub-Saharan Africa and Latin America. In 2012 it completed the merger of Aureos Capital, thereby creating the deepest bench of private equity experience across growth markets.
Employing over 300 people, the Group has over 30 offices spread across 6 regional hubs in Dubai, Istanbul, Mexico City, Mumbai, Nairobi and Singapore. Local presence across these markets provides the Group with unmatched expertise, know-how, proprietary transactional access and the ability to grow partner businesses across borders.
The Abraaj Group currently manages US$ 7.5 billion across 25 sector and country-specific Funds, encompassing private equity (majority and significant minority investments with ticket sizes between US$ 10 million to US$ 100 million) and real estate (primarily yield-generating) investments.
Funds managed by the Group have holdings in over 150 partner companies that collectively employ over 200,000 people and create sustainable value in sectors including manufacturing, education, retail, aviation, oil and gas, financial payments infrastructure, healthcare and agribusiness. The Group’s current partner companies include industry leaders such as Network International, the largest independent payment solutions provider in the Middle East and Africa, NEP Holding, with its Diamond brand and a market leader in the residential filtration market of Malaysia (with a growing presence in Singapore, Hong Kong, Taiwan and Southern China), Brookside Dairy, the leading dairy in East Africa and, Iasacorp, a long established family run women’s retail business in Peru.
The Group has set the standard for private equity investing in growth markets, having returned c. US$ 4 billion to investors from over 60 full and partial exits, providing industry leading returns across a range of companies that have emerged as today’s regional champions and tomorrow’s global challengers.
The Abraaj Group has an investor base of 300, including corporates, development finance institutions, financial institutions, pension funds, sovereign wealth funds, family offices, high net worth individuals and other institutional investors from Asia, Africa, the Americas, Europe and the Middle East.
The Abraaj Group is committed to the highest environmental, stakeholder engagement and corporate governance standards. The Group is a signatory to the United Nations-backed Principles for Responsible Investment and the United Nations Global Compact. The Group’s founder, Arif Naqvi, was appointed to the United Nations Global Compact Board by UN Secretary-General, Ban Ki-moon in 2012. In 2013 Mr Naqvi was awarded the Oslo Business for Peace Award, one of the highest forms of recognition given to global business leaders for fostering peace and stability through creating shared values between business and society.
Through its social investing programme, The Abraaj Group has supported best in class organisations focused on entrepreneurship and job creation, healthcare, education and community engagement and thereby enabled a deep-rooted and sustainable impact on the economic landscape of the markets in which it operates.
This publication is issued by Abraaj Capital Limited (ACLD), a member of The Abraaj Group that is authorised and regulated by the Dubai Financial Services Authority (“DFSA”). Several Group members are regulated by a number of international regulatory authorities including the DFSA under whose rules ACLD has issued this publication.