Warburg close to buying 20% stake in Indira IVF Hospital

MUMBAI: American private equity (PE) fund Warburg Pincus Llc is in the final stage of negotiations to buy a minority stake in leading fertility hospital chain Indira IVF Hospital Pvt Ltd, two people close to the development said.

Indira IVF will sell about a 20% stake for ₹700 crore, the first of the two people said, which would value the company at ₹3,500 crore. This is the first time the fertility chain is raising private equity funds. Both people spoke on condition of anonymity.

In February, Mint reported that three US-based PE funds— Carlyle Group, Warburg Pincus and TPG Growth — were in separate discussions to buy a minority stake in Indira IVF. According to the report, Indira IVF was looking at a valuation of $600-800 million (₹4,000-5,300 crore), and the promoters could dilute their stake by 10-20%. However, other PE funds uncomfortable with that valuation backed out and it has been reduced to $550-600 million and Warburg is the only one left, the person cited above said.

Indira IVF, founded by Ajay Murdia in 1988 in Udaipur, currently has 18 centres across India in cities such as Jaipur, Indore, Nasik, Delhi, Kolkata, Pune, Ahmedabad and Agra. Indira IVF plans to use the proceeds of the share sale to expand its presence to more cities in India, the second person said.

Mails sent to Warburg Pincus spokesperson and Ashish Lodha, director finance at Indira IVF, were not answered.

Indira IVF’s rivals include Mumbai-based Bloom Fertility Centre, Bengaluru-based Milann, Mumbai-based Morpheus IVF, Nova IVI Fertility, New Delhi-based Ridge IVF and Jaipur-based Shivani Fertility and Mother Care.

About 75% of the in-vitro fertilisation (IVF) market in India is captured by the top 500 clinics, comprising a few corporate chains and private clinics, while the rest are held by unorganised players, according to a 2015 report by advisory firm EY. In-vitro fertilisation cycles or the number of IVF processes in India are estimated to rise from an estimated 100,000 in 2015 to 260,000 by 2020, driven by an increase in the number of infertile couples seeking treatment, said the report.

In order to tap the opportunity, global financial firms remain keen on investments in India. Japanese financial services firm Orix Corp is in talks to buy a minority stake in Bengalurubased fertility clinic chain Nova IVI Fertility, from existing investors Goldman Sachs Group Inc and New Enterprise Associates. In October last year, India Life Sciences Fund II invested $6.2 million (₹40 crore) in Oasis Centre for Reproductive Medicine, a Hyderabad-based IVF chain.

Warburg Pincus, which has an exposure of over $60 billion in more than 780 firms, has invested about $4 billion in India till date.

THE NUMBER OF IVF PROCESSES IN INDIA ARE ESTIMATED TO RISE FROM AN ESTIMATED 100,000 IN 2015 TO 260,000 BY 2020