NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, July 15, 2014

Dr Naresh Trehan’s vision for his latest venture is to emulate the best-in-class health care facilities in the world

As one of India’s leading cardiovascular surgeons, Dr Naresh Trehan is always pressed for time. When Forbes India went to interview him, he had just stepped out of the operating theatre. Patients were streaming in and out of his chambers. It was only after an hour of consultations that Trehan found time to discuss his dream project: Medanta-The Medicity, a multi-specialty medical institute in Gurgaon, modelled along the lines of integrated medical institutes such as Mayo Clinic and Stanford University Medical Center in the US.

Since its inception in 2009, the hospital has rapidly grown and notched revenues of Rs 1,100 crore in FY2014. Its early success caught the eye of the Carlyle Group which, in December 2013, bought a 27 percent stake in it for Rs 960 crore from Avenue Capital. The deal values the company at Rs 3,550 crore, and puts Medanta’s enterprise value per bed at Rs 2.8 crore compared to Rs 1.4 crore for Apollo Hospitals and Fortis Healthcare.

The man behind it
Trehan (68) is hardly an unknown entity in the medical world. As the recipient of the Padma Bhushan and the Padma Shri, he has long been in the public eye. Also because of the prominence of his first business initiative, the Escorts Heart Institute (later acquired by Fortis) in New Delhi, which he helped establish in 1988. He left the hospital after two decades to set up Medanta with co-founder Sunil Sachdeva.

The initial investment of Rs 1,000 crore was raised through a mix of equity and debt: A Rs 500-crore loan from Yes Bank and six public sector banks, and the rest from Trehan, engineering and construction group Punj Lloyd and Avenue Capital. Medanta has paid off most of the loan, with Rs 126 crore remaining.