The private equity arm of
The Goldman Sachs Group Inc.
(
GS
) and New Enterprise Associates (NEA), an American venture capital
fund, have come together with an investment of $54 million in
Bangalore-based Nova Medical Centers, Reuters reported on Monday.
Nova is a leading Indian healthcare firm for day/short-stay
surgical care and fertility.
Although there are ongoing concerns among global buyout firms about
investing in India as returns have gone down due to rupee
depreciation, the prospects of the Indian healthcare sector is
still attractive to private equity firms. As of the first half of
2012, private equity investments in India's healthcare sector have
surged 2.5 times to $630 million from $181 million recorded in the
prior-year period.
Goldman will invest about $40 million in Nova, while NEA will make
an additional investment of $14 million. Initially, NEA invested
$15 million in the center.
The investment by Goldman and NEA will aid Nova in expanding its
specialty surgery and fertility businesses. Moreover, Nova's
footprint across the country will increase both organically and
through acquisitions.
To date, Nova has accumulated $90 million and is planning to set up
25 new specialty surgery centers across India and the Middle East
in the next two years. Therefore, India's healthcare delivery
services industry, surgeons and patients will receive better
services and amenities.
Moreover, Goldman has strategizes to collaborate with skilled
management teams and owners to expand premium businesses in
under-served sectors, which hamper India's growth. On the other
side, NEA has always focused on healthcare units globally as well
as in India. Therefore, helping healthcare services platforms to
improve quality, making it more accessible and trimming down costs
is the strategy of the firm that it is utilizing with its
investment in Nova.
Taking into account its investment in Nova, Goldman will be the
holder of approximately 26% of the company. This marks the largest
shareholding by a firm in Nova.
Goldman has vigorously invested in private equity in India.
Previously, the company invested $115 million in Max India
healthcare. Since 2006, the firm has endowed more than $2 billion
funds in India, while globally it has come up with an investment of
about $8 billion in the healthcare sector spread over more than 30
companies.
Therefore, yielding returns on such investments will accelerate
Goldman's profitability and instill investors' confidence. Goldman
currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Among Goldman's peers,
Citigroup Inc.
(
C
) also retains a Zacks #3 Rank.
CITIGROUP INC (C): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
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