'PE funds quadrupled healthcare investment this year'

Private equity funds quadrupled their investment in India's primary healthcare in the year just ending, on the expectation that the sick and ailing will stop seeing family doctors in often cramped and dingy clinics and check into modern chains sprouting up across the country, according to data compiled by Thomson Reuters.

Goldman Sachs Group Inc, Warburg Pincus LLC, Sequoia Capital and the Government of Singapore Investment Corp are among investors that pumped $520 million into India's basic healthcare industry this year, compared with $137 million in 2011. Some analysts predict investment will surpass $1 billion in 2013, says a Reuters report.

Organised healthcare providers, including Apollo Hospitals Enterprise Ltd and Fortis Healthcare Ltd, are betting that growing numbers of patients will be willing to pay two or three times more for better-equipped clinics - all under a model that can be replicated fast and offers investors the potential for quick returns.

"The family doctor concept is slowly phasing out as migrants in cities look out for a brand rather than visiting a general physician next door," said Santanu Chattopadhyay, chief executive of NationWide Primary Healthcare Services, in which US-based Norwest Venture Partners has invested $4.6 million.

The opportunity is vast, as India's unorganised primary healthcare system is worth $30 billion and is growing at least 25 per cent a year.

Another attraction is that primary healthcare providers such as outpatient clinics and diagnostic centres are not capital-intensive, so investors don't have to write out big cheques.

Also, unlike many restrictive Indian industries, from insurance to real estate and telecom, there are no limits on foreign ownership in healthcare.