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“The reality is that certainly, India is [at] the foothills of evolution of the healthcare sector,” he told Mint in an interview. “At the moment, what you think of as big players are very small compared to what you would find in an industry that’s been consolidating for 30 or 40 years,” he added.
Compared to markets like Australia, the UK and South Africa, where the top three or four private hospitals control 60-70% of bed capacity, India’s hospital sector is very fragmented with the top ten private players owning less than 10% of the private bed capacity. “I would say it is more fragmented in India currently, than France, the UK, Australia and South Africa when I started my career 30 years ago,” Hollamby said.
Manipal Health Enterprises, Apollo Hospitals Enterprises and the recently-merged Aster DM Quality Care are the top three private hospital chains in India by bed capacity. Currently, Apollo has 10,169 beds according to its Q3FY25 investor presentation, and the combined Aster DM Quality Care would have over 10,150 beds, according to the company. Manipal has more than 9,500 operational beds, according to its website.
However, consolidation is happening at a faster rate in India, and there would be huge changes in the sector in the next 20 years.
“There’s just an enormous opportunity for future consolidation, standardization…there’ll be huge changes in India in the next 20 years, like in several countries that are further ahead in the consolidation phase than India,” Hollamby said. While initially the consolidation might be in the 8-10 groups, Hollamby believes there is a lot of room for mergers. “There would be real temptations to merge and to gain scale,” he said.
In addition to larger chains merging, India will likely have brands for chains of dentists, veterinary clinics, etc. as these doctors running these businesses near retirement age, and are seeing more private equity interest. “What I think we will see is a corporatization of businesses which are currently owned by owner managers,” said Hollamby.
“…what’s happening is a lot of these doctors as they age, they realize that I’m actually taking a lot of time away from my organic clinical practice, which I want to refocus on and it is probably a good thing to merge with something larger, where the admin is taken care of,” Subhakanta Bal, managing director, Rothschild & Co, added.
In healthcare, Rothschild, a Paris-headquartered financial advisory and investment banking firm, was most recently advisor to TPG and Evercare on the sale of a controlling stake in Care Hospitals to Blackstone in 2023, advised on the sale of a majority stake in Ideal Cures to Colorcon in 2023, and advised on the sale of sale of Oaknet Healthcare to Eris Lifesciences in 2022.
Room for IPOs
A number of hospital chains are eyeing going public in India, as the sector sees increasing interest.
“You have a very happy IPO market here. We have a lot of investors who want to buy into the story. You have good liquidity, a very positive valuation environment for companies,” Hollamby said. “The reality is, private equity has been buying up everything in France, UK etc. and has been a very strong source of capital…whereas in India, there are private equity houses, but many promoters are very proud of their businesses, and it’s almost like, ‘when I grow up, I want to be the promoter of a public company’,” he added.
Healthcare is a significantly underrepresented sector in the public markets in India.
“If you compare the market cap of listed stocks in pharma and the total size of pharma sector in India, and you do the same for healthcare services, you will find that healthcare services is massively underrepresented in terms of public market listed stocks,” Bal said, adding that this means a healthcare services asset will generate a lot of interest from public market investors.
The bankers believe that IPOs will be a secular trend in India in the coming years. In the past ten years of total IPOs in India, 60%-70% have been in the past three years, Bal pointed out, adding that India was the second-most active IPO market after the US in 2024.
The other big change that is underway is an increasing share of domestic flows into markets, Bal added. “If you look 10 years back, let’s say to 2015, a lot of IPOs were much more dependent on foreign institutional capital coming into the country…We think this trend of significant domestic inflows into public markets is secular, because, you know, the ownership of equity markets by domestic investors is still much lower compared to several other countries, and there’s a long runway for growth here.”
For healthcare, most of the investor interest is domestic, given that it is a very regional business.
“There’s a lot of expertise in India, a lot of Indian entrepreneurs…if you look at the origin of some of the hospital groups, they didn’t start with their money in hospitals. They had money and they decided to do something,” Hollamby said. “So, I think the businesses will just continue to grow. I don’t really see a role for foreigners,” he added.
Growth of allied services
As hospitals get consolidated and corporatised, allied services like diagnostics will, too. “I expect a lot more consolidation in the hospital industry, acute hospital industry, or the ambulatory centres, whatever it turns into being,” said Hollamby.
“In diagnostics, that’s again an industry that can only grow when there are customers, business to business to take the service,” Hollamby said, adding that we’re still early in the development of hospital capacity needed for the general Indian population.
However, as services start getting more sophisticated, there will be a growing demand for more diagnostics, and more sophisticated tests – leading to further growth of diagnostics chains.
“Assuming that the growth in the economy and the prosperity of people continues the way it has been, we will need massively more diagnostic capacity. There’s a lot of room for growth,” Hollamby added.
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