India Value Fund Advisors (IVFA) has bought a significant minority stake in maternity care chain Cloudnine Hospital, with an investment of Rs 400 crore. The investment round has also provided a near seven-fold return to Matrix Partners India, an early investor in Cloudnine which sold some of its holding in this latest transaction according to two people privy to the deal.
"(Matrix) sold a part of its holding for Rs 150 crore," said one of the people quoted above.
Matrix Partners declined to comment on the transaction.
At the completion of this funding round Cloudnine was estimated to be worth over Rs 1,300 crore said the source. The Bengaluru-based company has so far raised a total of Rs 545 crore from investors.
Early investors Matrix and Sequoia Capital India continue as shareholders in Cloudnine, but did not participate in this round.
The funding round is the second largest for a single specialty healthcare chain in India after Vasan Healthcare which raised $150 million from GIC, Sequoia Capital and WestBridge Capital Partners.
"Cloudnine has excellent clinical excellence and this is something we pay a lot of attention to," said Siddharth Dhondiyal, managing director, IVFA.
Dhondiyal and Sanjay Arte from IVFA have joined as directors on the board of the company.
The funds raised will be used to set up 10-12 hospitals (4-5 each year), evaluate strategic collaborations with top medical professionals or buy-over existing units to be rebranded as Cloudnine.
"We need to tweak the model a bit for non-capital cities and are currently doing our research," said Rohit MA, managing director, Cloudnine,
Cloudnine will also be launching an improved version of its mobile app in six months with enhanced features and services to help expectant mothers manage their entire pregnancy life cycle. Rohit indicated that Cloudnine may look at tying up with existing service providers in segments like F&B, grocery, offline retailers.
"Our current capex per unit is about Rs 18-24 crore and that makes requirement of capital crucial," Rohit said. At present, the chain consists of 12 hospitals and clinics in Bengaluru, five across Pune, Chennai, Gurgaon, and Mumbai.
Cloudnine earned revenues of Rs 150 crore in FY14-15 and is targeting Rs 220 crore in FY15-16, Rohit said. It will turn profitable at an Ebitda level by FY15-16, he added.
IVFA has been a fairly active investor in the healthcare and life sciences space, with Cloudnine being its eighth deal.