homehealthcare NewsIndian hospital industry sees strategic shifts as Aster DM and Fortis Healthcare seal major deals
Indian hospital industry sees strategic shifts as Aster DM and Fortis Healthcare seal major deals
In 2 big deals this week, Aster DM Healthcare sold its Gulf business for $1 billion, and Fortis Healthcare divested over 60% stake in Fortis Malar Hospital in Chennai for ₹128 crore. Read to find out how the hospital business in India is priming itself for growth in the home market with a focus on core geographies.
This week saw two major deals in the Indian listed hospital space with Aster DM Healthcare selling its Gulf business for $1 billion to Fajr Capital and Indian promoters (the Moopen family); and Fortis Healthcare Ltd selling over 60% stake in Fortis Malar Hospital in Chennai for ₹128 crore to south-focused hospital chain MGM Healthcare Private Ltd.
These deals seem to be part of a spate of strategic moves in the Indian hospital industry —with various companies engaging in mergers, acquisitions, and divestments to help them focus on better capital allocation and prime themselves for growth in the home market.
One such trend is concentrating on growth in one's core markets. Fortis Malar is the second facility Fortis Healthcare has sold in the Chennai market this year, marking a strategic move to entirely exit the Chennai market and focus on specific geographies, particularly in the north.
In a move to strengthen its position in its core market of the north, Fortis earlier this year invested ₹225 crore to acquire a hospital in Manesar to focus on the Delhi NCR and Punjab region.
Similarly, both Fortis' Chennai hospitals were picked up by two south-based hospital companies looking to strengthen their share in the region. Kauvery Hospitals bought Fortis 200 bed facility at Arcot, while MGM Healthcare, a chain focusing on advanced healthcare, acquired Fortis Malar.
Kauvery is looking to scale up to 3,500 beds from 1,600 currently in the region and MGM’s bed count will increase to 800 in Chennai with the Malar acquisition.
Talking about the southern market, funds from the sale of Aster DM’s Gulf business are expected to be used to fuel the company's expansion plans in the south and the west of the country. Aster DM, which has six hospitals in Kerala and five each in Karnataka and Andhra Pradesh, is planning to add 1,500 beds by FY27.
Other examples of strengthening a core market include Narayana Health deploying ₹250 crore for brownfield expansion the company’s flagship geographies Bengaluru and Kolkata.
Then there are NCR-focused Medanta, looking to launch a 400-bed multi-speciality hospital in South Delhi in association with DLF, and Jupiter Hospitals choosing the densely populated micro markets of western India — with the latest being a project in Dombivili underway.
According to experts, the reasons for more aligned investments are to strengthen a core market which will help scale market share more easily in an established market across synergies on specialities, hence helping margins.
Many hospitals are undertaking the acquisition route as it provides an immediate addition to beds with a faster EBTIDA turnaround. However, the big risk is competition. Most of the markets we have spoken about are well-served tier 1 metros such as Chennai, NCR, and Mumbai, where hospitals do run a risk of overcrowding.
(Edited by : Shoma Bhattacharjee)
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