Toro Finserve Launches India's First Healthcare Real Estate Fund of US $ 500 million
FUNDING (/CATEGORY/FUNDING-INVESTMENTS) 3-min Read
Toro Finserve launches India’s first Healthcare Real Estate
Fund of $500M
(/author/webmaster) 29 MAY 2017TEAM YS
Kapil Khandelwal, an investor, has launched India Healthcare Opportunities Fund
(IHOP) as SEBI Alternative Investment Fund under Category 2. The total corpus of
the fund is $500 million. The corpus is of $250 million with an additional leverage of
A press note shared by the fund states that the fund will focus on investing in
stabilising healthcare real estate. The focus will be on providing long-term leases
from stabilised assets such as hospitals, diagnostic centres, rehab facilities, and
assisted living facilities with established healthcare operators in tier-1 and tier-2
cities in India.
The fund already has commitments of $110 million from some state governments in
India, UHNIs, Fund of Funds from abroad. It is expected to start its formal road
show in India and abroad in June-July 2017. The fund is in discussions with various
banks and financial institutions for lease rental discounting (LRD) and leverage and
distribution of the fund.
Kapil, Managing Partner of Toro Finserve, outlines that the total value of healthcare
real estate already built is of over $120 billion with less than 5-7 percent operating
under asset light model.
He adds that further over $200 billion is expected to be spent on development of
healthcare infrastructure for India to come to the international norms in terms of
real estate to get to Indian Government’s target of three beds per 1,000 people by
“Our fund expects to create and invest in healthcare infrastructure where
institutional investments in healthcare infrastructure has been shy and selective
around a few chains of private hospital so far. Indirectly, we are also creating social
impact through raising the supply of scarce healthcare infrastructure in our
country,” says Kapil.
The investment and advisory committee of the fund includes Arvind Lal, Chairman
of Dr Lal’s Pathlabs, Kewal Handa, Ex-Managing Director of Pfizer, India, Sampath
Shivangi, ex-Chairman of Association of American Physicians of Indian Origin and
2017 Pravasi Bharat Awardee and Dr Sathya Kallur, entrepreneur and dentist to
celebrities in the US and Founder of Swiss Smile in India.
Speaking of the team, Kapil adds: “Our team has worked on over $42 billion of real
estate transactions and $2 billion of healthcare transactions globally.”
Currently, the fund is evaluating deals worth $200 million in Indian hospital chains,
assisted living, and diagnostic centres to issue term sheets.
Kapil adds that private healthcare operators want to expand to
underserved/profitable areas to widen their reach, but have limited access to
affordable capital. Raising finance from private equity firms and financial investors
is very expensive and IPO is not an option for many of the hospital operators.
Banks may provide loan against property to the operators, but generally the
amount is not adequate (restricted to 50-60 percent of the property value) for an
operator to expand and stabilise operations in a new location.
“In the US, the healthcare industry makes up an astonishing 17.3 percent of the
nation’s economy, whereas in India it contributes only 4.1 percent. Growth drivers
seem to be perfectly aligned now more than ever, owing to reforms and a
promising healthcare policy,” adds Kapil.
The Ministry of Heath, Government of India announced National Health Policy 2017
to stimulate investments and growth of infrastructure in healthcare in India. There
are limitations around the forms of capital the healthcare industry in India has been
able to raise through banks, financial institutions, and private equity.
“Our model of sale-leaseback transaction of real estate assets for medical
entrepreneurs who are looking to expand their healthcare business by either
setting up one or a chain of hospitals, old-age homes or diagnostic centres in the
country. This would allow them to free up capital to deploy in their business and
focus on better returns in their business of healthcare services delivery,” explains
Currently, the fund expects to acquire and build over million sq ft of healthcare
space over its term. The fund has also built out a consortium of partners which are
going to deliver healthcare infrastructure, cheaper, better and faster to reduce the
time to market and operating costs for the healthcare facilities invested by the
Kapil believes that one of the major pain points for developing healthcare real
estate is the time to build and the regular operating costs of running and
maintaining these facilities. “Our plans are to reduce these by half through our
strategic partner ecosystem of our fund,” says Kapil.
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