Private equity (PE) firms are increasingly investing in single-specialty hospital chains in India’s tier-2 and tier-3 cities, recognizing significant growth potential in these regions.

Drivers of Investment:

Rising Demand: Non-metro locations such as Lucknow, Vizag, Jaipur, Cochin, Siliguri, Guwahati, Bhubaneswar, and Patna are experiencing increased demand for quality healthcare services. This surge is attributed to higher disposable incomes and greater health awareness among residents.

Availability of Medical Professionals: An increasing number of qualified doctors and specialists are choosing to practice in these smaller cities, enhancing the feasibility of establishing specialized healthcare facilities.

Notable Investments:

General Atlantic’s Acquisition of Ujala Cygnus: In 2024, U.S.-based PE firm General Atlantic acquired a majority stake in Ujala Cygnus, a hospital chain with 21 facilities across northern India’s tier-2 and tier-3 cities. This investment aims to enhance healthcare infrastructure and service quality in underserved regions.

GIC’s Investment in Asia Healthcare Holdings (AHH): Singapore’s sovereign wealth fund, GIC, invested an additional $150 million in AHH ahead of a potential initial public offering. This move positions GIC as the largest shareholder in AHH, reflecting confidence in the growth prospects of India’s healthcare sector.

Investment Trends:

Between 2022 and 2024, Indian hospitals attracted approximately $4.96 billion from PE investors, accounting for 38% of total deals in the healthcare sector during that period.

Implications:

While these investments are poised to enhance healthcare accessibility and infrastructure in smaller cities, stakeholders emphasize the importance of maintaining patient care quality and affordability. The influx of private capital should align with the broader goal of equitable healthcare delivery across India.

In summary, the strategic focus of PE firms on small-town hospitals reflects a broader trend of tapping into underserved markets, aiming to bridge the urban-rural healthcare divide and meet the evolving needs of India’s diverse population