India’s Hospital Sector Sees Surge in Deal-Making Amid Rising Investor Interest

Highlights:

• KKR acquires Healthcare Global (HCG) for $400 million, marking its strong comeback to the Indian healthcare sector.
• Foreign direct investment (FDI) in hospitals reached $1.5 billion in FY24, making up 50% of total healthcare FDI, a significant rise from 24% in FY21.
• Reliance Industries acquired Karkinos for ₹375 crore under the Insolvency and Bankruptcy Code (IBC).
• Bajaj Group plans to invest ₹10,000 crore to set up a new chain of hospitals in metro cities.
• Indian hospital market cap surged 9x from ₹37,500 crore in FY20 to ₹3.5 lakh crore in FY24, reflecting strong growth.
• Seven leading hospital chains to add 14,000 new beds in 3-5 years, addressing the shortage in medical infrastructure.
• Medical tourism in India grew from 0.18 million in 2014 to 0.73 million in 2024, positioning the country as a global healthcare hub.

KKR’s Strategic Entry and Growing Private Equity Interest in Healthcare

India’s hospital sector is experiencing record-breaking deal-making activity, driven by rising healthcare demand, medical tourism, and increased insurance penetration. The latest high-profile deal comes from KKR, a New York-based global private equity giant, which acquired Healthcare Global (HCG) for nearly $400 million from CVC Capital Partners.

This acquisition marks KKR’s return to the Indian healthcare sector after exiting Max Healthcare two years ago. In 2023, KKR also acquired Baby Memorial Hospital, reaffirming its long-term commitment to India’s medical infrastructure.

“Healthcare continues to be a thematic focus for KKR in India. Our investment in HCG will support the development of medical infrastructure and the delivery of critical oncology services and care to more patients in the country,” said Akshay Tanna, KKR’s Head of India Private Equity.

Surge in Foreign Direct Investment (FDI) in Indian Hospitals

The hospital segment has emerged as the biggest recipient of FDI in healthcare, overtaking pharmaceuticals.

• Hospitals accounted for 50% of total healthcare FDI in FY24, translating to $1.5 billion.
• This marks a massive jump from 24% in FY21 and highlights the increasing investor preference for hospitals over pharma and diagnostics.
• Private equity firms and global investors such as Temasek, Blackstone, and Carlyle have been actively exploring deals in the sector.

According to Hedley Goldberg, Global Head of Healthcare Services at Rothschild & Co, international investors are closely evaluating India’s hospital sector due to its multi-decade growth potential.

Why Are Investors Rushing Into Indian Hospitals?

Several key factors are fueling the hospital sector’s transformation into an investment hotspot:

1. Expanding Healthcare Infrastructure

• The Indian government’s increased spending on healthcare infrastructure, especially in tier-2 and tier-3 cities, has boosted investor confidence.
• Private hospital chains like Manipal, Apollo, and Fortis are rapidly acquiring new properties and expanding into emerging markets.

2. Increased Health Insurance Penetration

• India has witnessed growing health insurance coverage under both public and private schemes.
• The rise of Ayushman Bharat (PM-JAY) and private medical insurance policies has made healthcare services more accessible, driving demand for specialized hospitals.

3. Medical Tourism Boom

• India is now a global leader in medical tourism, attracting patients from the US, UK, Middle East, and Africa.
• The number of medical tourists increased from 0.18 million in 2014 to 0.73 million in 2024.
• The government’s “Heal in India” initiative aims to make India a top destination for affordable, high-quality treatments.

4. Digital Transformation and AI Adoption

• Hospitals are rapidly adopting AI-driven diagnostics, robotic surgeries, and telemedicine to improve patient outcomes.
• Reliance Industries’ ₹375 crore acquisition of Karkinos (an oncology-focused digital healthcare platform) highlights the growing role of tech-driven healthcare solutions.

Corporates Enter the Hospital Business: Bajaj Group’s ₹10,000 Crore Investment

Apart from private equity players, major Indian conglomerates are entering the healthcare space.

• The Bajaj Group plans to invest ₹10,000 crore to set up a chain of hospitals in major metros.
• This move aligns with the increasing corporatization of healthcare, as businesses seek to capitalize on the sector’s high-growth potential.
• Tata, Birla, and Hinduja have traditionally been in healthcare, but have yet to establish a pan-India presence like Apollo or Fortis.

Hospital Chains Expand Operations to Meet Rising Demand

Leading hospital groups are aggressively expanding their bed capacity to cater to the rising demand for specialized healthcare.

• Manipal Hospitals acquired a five-story hospital property in Mumbai for ₹415 crore, reinforcing its focus on expansion in metro cities.
• Apollo Hospitals and Max Healthcare have announced plans to add 14,000 new beds in the next 3-5 years.
• India needs 100,000 additional beds over the next 5-7 years to meet growing healthcare demands.

Despite these expansions, experts believe there will still be no oversupply of hospital beds in India.

How Many Hospital Beds Does India Have Compared to Other Countries?

• India has only 16 hospital beds per 10,000 people, one of the lowest among major economies.
• In comparison:
  • China has 42 beds per 10,000 people.
  • The US has 28 beds per 10,000 people.
  • Germany has 80 beds per 10,000 people.

Stock Market Performance: Indian Hospital Stocks Soar

The hospital sector has delivered stellar stock market performance, driven by strong revenue growth and improved profitability.

• Apollo Hospitals’ stock surged 28% in 2024.
• Max Healthcare shares soared 64% in 2024, outperforming the broader market.
• The total market capitalization of the Indian hospital sector jumped 9x from ₹37,500 crore in FY20 to ₹3.5 lakh crore in FY24.

Government Initiatives and Policy Support

The Indian government is actively promoting the hospital sector through various initiatives:

• Union Budget 2025-26:

  • Announced incentives for medical tourism and private healthcare infrastructure development.
  • Introduced tax breaks for hospital expansions in tier-2 and tier-3 cities.
  • Pushed for easier visa norms to attract more medical tourists.

• Ayushman Bharat (PM-JAY):

  • India’s flagship public health insurance scheme now covers over 500 million people.
  • Increased reimbursements for critical treatments are making hospitals more financially viable.

India’s Hospital Sector is Poised for Long-Term Growth

India’s hospital sector is undergoing rapid consolidation, driven by:

• Increased investor interest from private equity and corporates.
• Expanding healthcare infrastructure and growing insurance coverage.
• Booming medical tourism and AI-driven healthcare innovations.

With hospital chains adding 22,000+ new beds over the next few years and FDI inflows at record highs, India is set to become a global healthcare powerhouse. Investors, both domestic and international, are rushing to capitalize on this multi-billion-dollar growth opportunity.