In its website Narayana Health (NH) states it is ‘Amongst top 50 local dynamos of the world’ (http://www.narayanahealth.org/)
NH’s growth is phenomenal from 225 beds in 2000 in Bangalore to 7500 beds in 2014 in 29 hospitals across 17 cities. NH wants to grow to 30000 beds by 2018. NH has a project stated to be worth $2billion over 15 years in the Cayman Islands in association with an American non-profit partner for the purposes of medical tourism style of healthcare services. (Cayman Island has a population of approximately 57000 with the financial services industry seemingly as its main economic activity and the world’s second most significant tax haven as per Wikipedia)
In percentage terms for the number of beds is 3333% growth in 14 years which is 238% growth each year.
With that kind of growth no wonder JP Morgan and Pinebridge invested $100million for a 25% stake in the company ( http://articles.economictimes.indiatimes.com/2013-05-24/news/39476325_1_heart-surgeon-elderly-patient-dr-devi-shetty ). There are news reports that they are now looking to exit.
Narayana Hrudayalaya Private Limited (NHPL) is a company with a subscribed capital of Rs 3,000,000,000.00 ($48million) and a paid up capital of Rs 3,457,530.00 ($55000) according to their last balance sheet of 31/03/2014 filed with the Indian government. NHPL has ‘charge amount secured’ as charges registered in the MCA government of India website Rs 2,005,500,000.00 ($31million) to Indian financial companies. In other words it seems like NHPL has Rs 200crores of secured loans for Rs 34 lakhs worth of paid up capital. This company has many of its stakeholders’ representatives as directors.
There is also another private limited company called Narayana Hrudayalaya Surgical Hospital Private Limited (NHSHPL) with authorised capital 50,000,000.00; paid up capital of Rs 27,027,040.00; charge amount secured Rs 541,238,215.00 In other words Rs 54crores of secured loans for a paid up capital of Rs2.7crores.
Narayana Hrudayala’s quoted profit is about 8% which is decent but not probably good enough for some. At a capex of Rs 17.5lakhs per bed their 7500 beds would result in assets of Rs 13,125,000,000 (about $211million). However, they have already stated they are trying an asset light model, where the asset belongs to someone else and Narayana Health provides operations.
The $100million private equity investment for the 25% stake of the company would put NHPL’s value at $400million. Perhaps there are other constructs/structures/vehicles that relates to these numbers quoted in the press. However, the subscribed capital of the company is $48million. Narayana Health website in its disclaimer, terms and conditions and copyright all refers to Narayana Hrudayalaya Private Limited, so for the purposes of this write up I am assuming that they are indeed referring to NHPL. NHPL has a variety of stakeholders including private equity representatives on its board; NHSHPL has only Dr Shetty and a couple of others on the board. As an industry watcher, I am not interested in the nitty gritty of their financial architecture. I am interested in how successful they will be in the medium and longer term.
NH and Dr Devi Shetty are known for their low cost model of private healthcare, their large scale operations and mega ambition. They have not accessed the public with a share offering yet. Their models have also been criticised (http://blog.drmalpani.com/2012/06/how-sustainable-is-narayana-hrudayalaya.html ) There is definitely something exciting happening with NH, time will tell us whether that excitement is positive. Time will tell us whether their debt will negatively affect them, or if their assets will sustain them, or a share offering will boost them. Time will also tell if their model of innovation would be successful.
Irrespective of whether one is interested in finance, healthcare, innovation, politics, off-shore investments, medical tourism or any combination of these, Narayana Health is a company to watch.
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PS: Narayana Health and its growth fascinates me and reminds me of Apollo Hospitals in its rapid growth phase. The above information is gleaned and presented from internet searches. I will be happy to correct, amend or post additional information if that was necessary.