Baring PE Asia (BPEA) has initiated talks to invest in Indira IVF, as a number of shareholders in the Indian infertility clinic chain consider selling their stakes to raise funds.
Talks are at a preliminary stage right now, sources told DealStreetAsia, as the deal is officially set to be launched by investment bankers in May. But even then, several big fund managers have already reached out to the company, they added.
“Even as bankers are currently in the process of preparing the documents, negotiations with BPEA have started,” said one of the sources. “By launch, I mean the time when bankers formally reach out to PE firms with the transaction,” the person added, indicating that other investors may join the fray going forward.
Goldman Sachs and JP Morgan are understood to be facilitating the proposed transaction. However, this could not be independently verified.
The funding is expected to be a mix of primary and secondary capital infusion as Indira IVF’s existing investor TA Associates is also looking to exit.
TA Associates acquired a significant minority stake in Indira IVF in 2019. While the exact quantum of stake that the PE major picked up could not be ascertained, industry sources peg it at about 40%.
“As of now, [TA Associates] is looking to do a partial stake sale. However, it all depends on the kind of negotiations that happens between the company and the investors,” said another person privy to the development.
When contacted, executives at BPEA declined to comment on the development, while separate emails sent to Indira IVF and TA Associates did not elicit any response.
Established in 1988, Rajasthan-headquartered Indira IVF operates over 110 infertility treatment clinics across 20 states in India. It has over 250 specialists and counts Oasis IVF, Crysta IVF, Milann Fertility Center, and Nova IVI Fertility among its competitors.
Indira IVF is understood to have clocked about Rs840 crore in revenue in FY19-20, a year before the COVID-19 crisis hit India. Subsequently, revenue fell to about Rs649 crore in FY20-21 before going up to about Rs920 crore in FY21-22. In the financial year ended March 31, 2023, it is expecting to rake in revenues of Rs1,200 crore, said industry insiders close to the company. However, the final numbers are still awaited.
Going by its revenues, Indira IVF could raise the funding at a valuation of between $850 million and $1 billion, said sources.
Established in 1997, BPEA currently has two business divisions. One is the equity and real estate business that Sweden’s EQT Partners acquired in October last year, and the other is the BPEA credit arm.
Late last year, the equity division of BPEA made headlines when it raised $11.2 billion for its latest flagship fund.
The IVF market in India is increasingly evincing investor interest as it is estimated to be underpenetrated by 9-12 times than the addressable demand in key cities such as Delhi, Mumbai and Bangalore, per healthcare experts.
Among recent deals closed in the sector, Oasis IVF raised about $50 million from homegrown PE fund Kedaara Capital last year. Earlier this week, Verlinvest made headlines when it made its first investment in the Indian healthcare sector by acquiring a controlling stake in fertility chain Ferty9 Fertility Center.
In the overall healthcare space, too, M&A activity is increasingly gaining steam with the latest deal being Singapore state investor Temasek picking up a stake in Manipal Health Enterprises. Other investors who have recently pumped in capital in the sector include IIFL PE, General Atlantic, and Ontario Teachers’ Pension Plan (OTPP).
The need for funding has gone up as hospitals are focusing on a ‘cluster approach’ — wherein they operate in a location cluster to tap brand, cost, practice and management synergies — to cash in on the huge pent-up demand for various treatments that had taken a backseat during the COVID-19 crisis.