CDC, Abraaj back Indian hospital expansion

The UK development finance institution and Dubai-based private equity firm have invested in healthcare chain Rainbow Hospitals.

CDC and Abraaj Group have teamed up to make an equity investment of $17.5 million in Rainbow Hospitals (Rainbow), an Indian healthcare chain looking to expand from the state of Andhra Pradesh to other parts of the country.

Established in 1999, Rainbow is India’s largest specialised paediatric and maternity care company with four maternity, paediatric and neo-natal intensive care units and an outpatient clinic in Hyderabad.

Having added four centres in the last six years, Rainbow now intends to develop beyond its base in Andhra Pradesh with new hospitals planned in Bangalore (Karnataka), Chennai (Tamil Nadu) and Pune (Maharashtra) as well as tier-two cities in Andhra Pradesh such as Vizag and Kurnool.

Dr Ramesh Kancharla, chairman and managing director of Rainbow, said the investment would enable the firm to expand the number of beds available for patients from 450 currently to around 1,000 by 2017.

Srini Nagarajan, CDC’s regional director for South Asia, said in a statement that demand in the Indian healthcare market is expected to grow at 15 percent per annum over the next decade and that “the gap in provision of healthcare in India will need to be plugged by the private sector”.

The investment is the first direct equity deal for UK-based CDC in India since it launched its new strategy late last year. Since 2004, the firm had operated primarily as a fund of funds investor. It now also provides direct debt and equity to businesses in South Asia and Africa.

Abraaj Group, which last year merged with rival Aureos Group, is based in Dubai and manages $7.5 billion across 25 sector- and country-specific private equity and real estate funds. It invests in Asia, MENA, Turkey, Central Asia, Sub-Saharan Africa and Latin America.