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Equities, Markets - February 26, 2025

Deal-making in the Indian Hospital Segment booming

Deal-making in the Indian Hospital Segment booming

 

Overview

The hospital sector is undergoing a rise in dealmaking, with KKR paying $400 million for Healthcare Global. This pattern demonstrates the industry’s increasing investor interest, which is being fueled by the expanding need for high-quality healthcare services.  The sector has grown significantly due to a number of factors, including medical tourism, government assistance, and rising insurance coverage.

 

The healthcare industry in India is humming with frantic negotiations.  In the most recent of the major transactions that are bringing major players into the industry and consolidating it, KKR, a global private equity and investment firm based in New York, paid close to $400 million to acquire a controlling interest in Healthcare Global (HCG), a leading cancer care hospital chain, from private equity peer CVC Capital Partners. After one of its largest payouts in India left Max Healthcare two years ago, KKR returned to the industry last year when it acquired Baby Memorial Hospital.

 

Deal making in the Healthcare Sector

In recent years, India’s hospital industry has seen a boom in deal-making, with hospitals now accounting for the majority of FDI, according to a December TOI report.  Hospitals received $1.5 billion, or 50%, of all foreign direct investment (FDI) in FY24.  Hospitals’ proportion of healthcare FDI has more than quadrupled from 24% in FY21 and has been increasing from 43% in FY20, indicating its increasing relevance. This is a significant increase.  Alongside the historically favored pharmaceutical industry, the pattern also shows a growing investor preference for hospitals.

 

According to a senior executive of the European investment bank Rothschild & Co., the robust private equity interest in India’s healthcare services firms is a very reliable sign of the multi-decade growth potential present in the industry. Hedley Goldberg, partner and worldwide head of healthcare services at Rothschild & Co., recently stated that an increase in interest is anticipated as foreign businesses assess the market and become more accustomed to the domestic environment.

 

Large Indian companies are also drawn to the healthcare industry in addition to a number of private equity investments. Although a number of corporations, like Tata, Birla, and Hinduja, are involved in the healthcare industry, none have established a substantial presence throughout India. However, the Bajaj Group is getting ready to enter the healthcare industry by establishing a network of hospitals in the nation’s major cities. It has set aside Rs 10,000 crore as an initial investment, according to Bloomberg.

 

Reliance Industries, owned by billionaire Mukesh Ambani, paid Rs 375 crore a few months ago to acquire Karkinos, a technology-driven healthcare platform with a cancer focus.  Under the Insolvency and Bankruptcy Code (IBC), Reliance purchased it.  During the Covid-19 pandemic, hospitals in particular saw significant growth in the healthcare industry.  However, many independent hospitals found it challenging to maintain their operations as the situation improved. Two groups of bidders have shown interest in these hospitals: those who are already in the business and looking to grow, as well as those who wish to turn these organizations around before they are sold to another party.

 

Prominent healthcare organizations, such as Manipal Hospitals, Apollo Hospitals, and Fortis Healthcare, have been making significant investments in key areas by purchasing both new and old buildings for greenfield projects. These purchases assist healthcare providers reach high-demand areas with inadequate medical infrastructure in addition to enabling them to swiftly develop their operations.  Last year, Manipal Hospitals, a division of Temasek Holdings, paid Rs 415 crore for a five-story hospital complex in the western district of Andheri, Mumbai.

 

Indian Healthcare Sector: A sweet spot for investors

The Indian hospital and diagnostic industry’s market capitalization has risen ninefold from Rs 37,500 crore in FY20 to Rs 3.5 lakh crore, revealing that the industry has attracted significant investor attention during COVID-19.  The growth has been driven by a combination of improved pricing, expanded insurance coverage, and shift towards more advanced surgeries, including transplants. The shares of major hospital chains such as Apollo Hospitals and Max Healthcare performed well in the stock market.  The large underserved rural market beyond urban areas, increased disease incidence, and growth in insurance coverage are the key growth drivers of the industry. The sector is highly attractive to investors as hospital chains are putting more money into growth, which is projected to grow at a rate of 12% per year in the next three years.

 

Need for more beds

India’s healthcare sector is being led by a rising number of lifestyle diseases and the requirement for affordable treatment. Seven listed hospitals will increase 14,000 beds in the next three to five years, supplementing the 22,000 extra beds in private hospital chains, as per a report by HSBC Global Research. The WHO states that India currently has a very low bed availability of approximately 16 per 10,000 individuals, and even with these augmentations, there will not be beds to spare. Over the next five to seven years, India will need to have an additional 100,000 beds to meet the growing healthcare demands of the nation, particularly as non-communicable diseases such as diabetes, cancer, and cardiac ailments increase.

 

Budget 2025 incentives

Healthcare and industry professionals praised the Union Budget 2025-26, which was released in February, for its emphasis on developing a patient-centric environment and reinvigorating medical tourism.  ‘Heal in India’ and medical tourism would be pushed in collaboration with the business sector, according to Finance Minister Nirmala Sitharaman.  According to her, it will be supported by simplified visa requirements and capacity building.

 

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Weakest performance of Rupee at 87.21 against US dollar

 

 

 

 

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India’s Ports Sector to increase capacity by the financial year 2028

India’s Ports Sector to increase capacity by the financial year 2028

 

Industry Overview

India’s ports play a crucial role in its trade and economy, accounting for 95% of export volumes and 70% of export values. India has 13 major ports and more than 205 designated minor and intermediate ports. Indian ports and the shipping industry are critical to the country’s economic progress. India is the world’s sixteenth-largest marine country, with 7,516.6 km of coastline and 20,275 km of national waterways throughout 24 states. This posture aligns India with 80% of the global maritime oil traffic, highlighting its potential to become a significant maritime player.

 

The Indian government plays a vital role in assisting the port industry and has permitted Foreign Direct Investment (FDI) of up to 100% through the automatic route for port and harbor building and maintenance projects. It has also provided a 10-year tax break for businesses that construct, maintain, and operate ports, inland waterways, and inland ports.

 

In FY24, all major ports in India handled 817.97 million tonnes (MT) of cargo volume, up 4.45% from 784.305 million tonnes in FY23. India’s merchandise exports in FY23 reached $451 billion, up from $417 billion the previous year. The government has implemented many initiatives to improve operating efficiency, including mechanization, deepening the draft, and expedited evacuations.

 

Capacity in increase by FY28

According to Motilal Oswal Financial Services, India’s ports sector is expected to increase capacity by 500-550 MTPA (Maximum Torque Per Ampere) yearly between FY2023 and FY2028. Further, port expansion will be driven by increased handling of petroleum, oil, and lubricants (POL), coal, and containerized goods. India’s ports today handle 95% of the country’s export volume and 70% of its export value, demonstrating the sector’s importance in facilitating trade.

 

The sector currently works at a capacity of 2,604 MTPA, although this is likely to increase dramatically in the next years. Between FY23 and FY28, India’s ports are forecast to increase capacity by 500-550 MTPA per year, driven by sustained expansion in petroleum, oil, and lubricants (POL) handling, as well as coal and containerized cargo.

 

In addition, freight traffic is likely to increase at a constant annual pace of 3-6%, with utilization rates stabilizing at around 55% in the medium term. Container traffic is expected to expand at a 4-7% annual rate over the next five years, driven by rising imports, lower freight costs, and the normalization of global supply chains. Transshipment, which today accounts for roughly 25% of India’s container throughput, remains a significant market, with key ports such as Chennai playing an important role in supporting it. The research also emphasizes the different responsibilities that major and non-major ports play in India’s port ecosystem.

 

Major and Non-major ports to play a vital role

Major ports, which are supervised by the central government, are typically located near industrial areas and handle a diverse range of cargo types based on regional demand. However, shared access channels cause congestion at these ports on a regular basis.  Non-major ports, administered by state governments or private operators through public-private partnerships, exhibit greater operational flexibility and efficiency, resulting in less congestion.

 

Non-major ports experienced a 7.6% increase in cargo traffic in FY23, exceeding major ports’ 4.7% gain.  According to the research, both big and minor ports will play important roles in boosting the sector’s overall growth.  India’s ports will continue to play a crucial role in trade and economic growth due to increased cargo traffic, improved infrastructure, and operations, according to the research.

 

Government initiatives

The Indian government has adopted policies and initiatives to improve port capacity and efficiency. The Sagarmala Programme, which began in 2016, is a major program targeted at lowering logistics costs for both export-import (EXIM) and domestic freight. The program aims to boost port capacity to 3,300 MTPA by 2025, with investments of INR 6t over 800 projects.  Optimizing logistics efficiency and lowering transit time can save INR 350-400 billion yearly.

 

Other initiatives include the Maritime Amrit Kaal Vision 2047 proposes to create six mega ports with world-class facilities, increasing India’s port handling capacity from 2,500 MTPA to 10,000 MTPA by 2047. This strategy aims to achieve 100% cargo handling at PPP berths and integrate sophisticated digital technologies into port operations.

 

Conclusion

India’s ports are vital for its economic trade and growth, and with the country’s massive coastline and strategic neighborhood, there are significant upbeat opportunities for marine expansion. The Government’s policies to support FDI, Sagarmala, and the Amrit Kaal Vision 2047 are fostering growth in capacity and operational efficiency. All these efforts along with the rising significance of India’s major and minor ports, make them powerful engines for the country’s economic growth and global trade competitiveness in the future.

 

 

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US oil export to India becomes double in the month of February

 

 

 

 

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Business, Economy - May 1, 2020

New FDI rules not for Taiwan inflows

New FDI rules not for Taiwan inflows

In a developing country like India, the existence of Foreign Direct Investment (FDI) is requisite for the growth of economy. Total Foreign Direct Investment in India from year 2000-2019 is US $658,893 million. In the wake of the Covid-19 outbreak, many cosmopolitan investor’s are trying to gain an undue advantage by acquiring Indian companies. To keep a tight rein on this, the government announced new FDI rules.

 

New norms by Indian Government on FDI:

The new rules announced by Indian government stated that there will be a comprehensive look over in any acquisition or takeover executed in India on Indian Companies. Once the government approves and sanctions, then only the further process can be implemented. This new norms of FDI will be pertinent for all the countries sharing boundaries with India viz. Bhutan, China, and others. Government officials noted the new norms announced by FDI will not be relevant for Taiwan. Smooth flow of operation between Taiwan and India will be continued with no barriers.

 

India – Taiwan Relationship:

Major chunk of money invested by Taiwan in India exists in sectors like Infrastructure and Energy. India and Taiwan have established a robust economic relation since decades. Approximately 100 Taiwanese companies are doing business in India. The relation between India and Taiwan was established in 1995, since then we hold a powerful relationship with Taiwan. The big question arises, Can’t Taiwan is easily influenced by China with their decisions on Foreign Direct Investment?. Media reports noted that in coming weeks government may clear all the queries on new FDI norms.

 

 

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Economy - June 15, 2019

FDI inflows increase but India drops down one rank

Foreign direct investment (FDI) inflows to India in 2018 grew by 6% to $4200 crores. However, India slipped its rank by one place in the latest ranking of top foreign...
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