How Accessible is PE/VC Funding to Regional Players?

1. How Accessible is PE/VC Funding to Regional Players? A focus on East India Vrinda Mathur Healthcare and Life-sciences Advisory

2. About Grant Thornton A cohesive global organization and leading professional services firm in India Ranked among top 5 in all major markets including India • Total global • revenues • $4.5bn • (2013) More than 38,500 people 2,000 people in over Member firm within Grant Thornton International based in over 130 11 cities and over 700 offices countries one of the largest fully integrated Assurance, Tax & Advisory firms in India

3. CONTENTS Regional Deals: Case Studies

4. Glaring Statistics on Indian Healthcare Scenario India ranks 112th on the WHO ranking of the world’s health systems. Healthcare spending accounts for a mere 4% of India's GDP, far below OECD's average of 9.5% Doctor-to-patient ratio for rural India, as per the Health Ministry statistics, stands at 1:30,000, well below the WHO’s recommended 1:1,000. Of the 1.35 mn hospital beds, only 48% are functional Merely 20% of India’s 1.2 billion population is covered by health insurance • least developed among all zones • hospital projects in Tier II towns getting funded by high interest borrowings from banks making projects unviable and most recently through select PE/VC investments • resistance from skilled staff to settle in this region • high number of private nursing homes but very few multi specialty/ network of hospitals East India Healthcare Scenario

5. Key Healthcare Investment Trends in India: 2011- 2013 • Healthcare has seen US$3.5bn worth of transactions during 2011-13 • Multi Specialty Hospitals have seen maximum volumes with an average US$50mn ticket size • followed by Single Specialty hospitals with an average US$20mn ticket size M&A and PE Activity between 2011-2013 Multi Specialty Hospital ~ US$ 7 bn Pharma Pharmaceuticals ~ US$ 3.5bn Diagnostic Centres Healthcare Average Deal Size (US$ mn) Medical Devices ~ US$ 1 bn MedTech Primary Care Services Single Specialty Hospital Biotechnology No. of deals

6. PE Investment Trends in India- Healthcare : 2011- 2013 Continuous Uptick in Volumes and Values Deal Volume 13 24 40 Deal Value US$ mn US$219 mn US$577 mn US$639 mn • Single and Multi Specialty Hospitals have seen significant traction in PE/VC investments • Deals in this space, particularly single specialty hospitals have happened at 3x-4x 1yr forward revenue multiples

7. Geographic Distribution of PE Deals in India: 2011 till date

8. Key Healthcare Investments in East India

9. Key Takeaways: Seeking PE/VC Funding • Positioning the growth story – a robust business plan   • Clarity on Fund requirement and Utilization • Timing of the fund raise • Groundwork (systems, financials, controls etc) • Right team in place to scale business • Quantum/ willingness of divestment • Approach the right set of funds • Visibility of financial and strategic plan post funding PRE DUIRNG POST

10. Case Study of Regional Healthcare Players raising PE/VC PE Funding: Mewar Ortho (Rajasthan) and Meditrina (Kerala) • Highlights • Promoter run chain of specialty hospitals in Non metros/ non urban areas • Closely held family business entailed evaluation of the merits and demerits of each funding route. • Significant narrowing down of target investors • Challenges • Limited or No exposure to external fund raising & Closely held family run business • Showcasing the profitability of the centres & network • Deciding on the domestic expansion strategy (tier II cities only) • First such transaction in the specialty orthopaedic space and in specialty cardiac space in India