Private equity funding in the healthcare sector surges 621% to $3.1 billion

Summary:
Private equity and venture capital investments in India’s healthcare sector surged 621% year-on-year to $3.1 billion in Q2 FY27, recording nearly 10 times the previous quarter’s value across 28 deals. Major investments included KKR’s $1.4 billion acquisition of Medicover’s Indian hospital business, alongside significant funding for Cloudnine, Yatharth Hospital and Manipal Health Enterprises. The sector also recorded exits worth $1.4 billion during the quarter. Meanwhile, overall PE/VC investments across industries rose 46% to $17.1 billion, although EY expects investors to remain cautious and selective amid inflationary pressures and elevated crude oil prices. 

Private equity and venture capital (PE/VC) funding in India’s healthcare industry surged 621% year-on-year to $3.1 billion in the second quarter of FY27, as per a report released by EY and the Indian Private Equity and Venture Capital Association (IVCA). Healthcare emerged as the second-largest recipient of these investments, trailing only infrastructure. The amount invested was almost 10 times the figure recorded in the preceding quarter.

The substantial growth in investment value was also reflected in transaction volumes. Healthcare companies recorded 28 deals during the second quarter, compared with 19 in the previous quarter. In September alone, investments in the sector reached $1.1 billion, representing a 465% increase over the same month last year. The month witnessed 11 transactions, compared with eight in August and six in July.

Hospital groups and other healthcare businesses received several of the quarter’s largest investments. Among the notable transactions, KKR purchased the entire 100% ownership of Medicover’s hospital operations in India for $1.4 billion. Meanwhile, Permira and TPG Capital committed $450 million to Kids Clinic India, the operator of Cloudnine, in exchange for a 35% ownership interest. Advent International also invested $329 million in Yatharth Hospital and Trauma Care Services, securing a 25% stake.

Another significant transaction involved a $242 million investment in Manipal Health Enterprises from ADIA, PSPIB, Norway’s Government Pension Fund Global and other investors.

According to the report, healthcare companies also recorded exits valued at $1.4 billion during the quarter. The sector ranked third in terms of exit value, following financial services, which registered $2.8 billion, and e-commerce, with $2 billion.

Looking at the broader investment landscape, PE/VC funding across all sectors increased 46% year-on-year to $17.1 billion during the quarter. Despite this growth, the total number of transactions declined 9% to 348, indicating that higher investment volumes were largely supported by bigger deals. According to the report, 36 large transactions valued at $13 billion represented 76% of the quarter’s overall investment.

The findings identify September as the strongest month for overall PE/VC investment activity so far this year. However, EY noted that persistent inflation and elevated crude oil prices could make investors more cautious in the months ahead. Vivek Soni, Partner and National Leader, Private Equity Services, EY India, stated, “Going forward, we expect PE/VC investors to remain cautious and selective and prioritise resilience of future profitability and return on capital.”