This article first appeared in The Edge Financial Daily on July 19, 2017

KUALA LUMPUR: IHH Healthcare Bhd’s wholly-owned Singapore unit Parkway Pantai Ltd is on the prowl in India for large hospitals in which it can take a controlling stake, according to Parkway Pantai’s chief executive officer for Indian operations, Ramesh Krishnan.

It was reported that IHH was interested in buying Fortis Healthcare. Though it told Bursa Malaysia last month that it was not close to concluding any deal, it acknowledged that it was evaluating opportunities in India. On Monday, The Hindu Business Line, quoting Ramesh, reported that hospitals in India are now ripe for the picking.

“There is readiness for consolidation, there are hospital promoters willing to let go and there are good assets available, but it depends on what you are looking for,” Ramesh was quoted as saying in Mumbai by the Indian publication. While the search is for large hospitals in big cities, the key factor is for IHH to get a controlling 51% stake, he said.

Hyderabad, he highlighted, is one market “poised” for consolidation, with four to five assets in “trouble” at any one point. The same could be seen in other cities, he said, though no other names were cited.

IHH is already in Hyderabad. It acquired a 51% stake in Hyderabad-based Continental Hospitals Pvt Ltd for Rs 310 crore in March 2015. In August 2015, it bought a 73.4% stake in Global Hospitals (Ravindranath GE Medical Associates Pvt Ltd) for Rs 1,284 crore, with some 1,100 operational beds in Hyderabad, Bengaluru, Chennai and Mumbai when IHH came into the picture.

But it has been about two years since then, and the group’s appetite is far from satiated, Ramesh said.

IHH’s strategy will continue to be skewed towards inorganic growth, he said, as greenfield projects come with the challenge of having to get approvals and setting them up.

Asked if healthcare mirrors pharmaceuticals, where promoters expect high valuations for assets, Ramesh said: “If you purely base that judgement on valuation of multiples alone, you will find Indian multiples to be high.”

But this is just one of the parameters of doing a valuation, he noted.

To IHH or Parkway Pantai, entities are evaluated by the niche clinical work they do, not the infrastructure or bed numbers they have. “With Global Hospitals, the unique feature was its liver transplant expertise, and Parkway expects to grow this into a multi-organ transplant service,” he said, admitting that promoter-run hospitals sometimes have corporate governance issues, but that IHH would ensure that such concerns are first “cleaned up” before it puts money in.