Manipal Education and Medical Group (MEMG), the holding company of Manipal Group is in discussion with a few investors including Kotak Equity to raise funds to the tune of Rs 100-125 crore.

The amount will be deployed to largely fund any strategic growth opportunities. In this regard, a detailed infrastructure modification plan has been drawn up to realign capacity in the existing flagship hospital at Bangalore. A new block with state-of- the-art facilities is being created in another hospital in the city. All these efforts would not only improve the look and feel of the hospital but also increase the revenue earning potential with additional beds in place, Dr Ranjan R Pai, CEO & MD, Manipal Education & Medical Group told Pharmabiz.

The challenge is not raising the funds as there is plenty of PE support, but to have access to experts with a similar vision. So far, we have been lucky to work with excellent PEs, he added.

IDFC stake in Manipal Health Systems, which is a part of MEMG has been bought back by the promoters, however it continues its stake in the Education services company of Manipal Group. There are no discussions with Milestone Religare or any investment made by Capital International into Manipal Health Systems and its hospital project at Penang has been withdrawn. At the moment MEMG has no plans to look at multiple PE players to raise its next round of funds. On the education front too, MEMG has a PremjiInvest funding of Rs 200 crore and does not intent to opt for further funds.

"There is significant interest by PE funds towards healthcare sector. This is fuelled by increasing demand for private healthcare driven by high levels of good clinical outcomes leading to patient confidence in Indian hospitals. Emergence of professional healthcare management has increased the dependence on health insurance/third part pay and co-pay for the cost of services which has led to credibility in business practices. Patients are demanding and willing to pay for quality care which would eventually lead to significant price adjustment. This combination positions healthcare industry with high growth trajectory, thereby making it attractive for the private equity players to invest," sad Dr Pai.

There is also a huge potential for India to become a medical tourism hub, specially with the reputation of Indian specialists, advanced level of tertiary and quaternary care available at affordable costs. Coupled with this, is the fascination amongst the western world for India as tourism destination and the ability to package the same is an opportunity. "To convert this opportunity into a sustainable industry, will require not just upgrade of hospital infrastructure but significant enhancement in the logistics of surface transport, good roads and airports. There is need to address the process of foreign insurers to pay for services availed in India. Since all these issues are part of the expected evolution in medical tourism, we would definitely want to set up a capacity in the northern part of Bangalore, which need not necessarily be only for the foreign patient because there is a huge potential to offer high-end services to Indian patients as well, said Dr Pai.