In an unprecedented development, an Indian PSU has tied up with a venture fund to form a 50:50 joint venture company. Hindustan Latex, the world’s largest manfacturer of condoms, has tied up with a $30-million philanthrophic US-based VF, Acumen Fund, for setting up a chain of Lifespring hospitals in India.
New York-based Acumen will infuse $20 million as paid-up capital in the Hyderabad-based new entity initially and scale it up in the next few years. Acumen Fund is known for its investment in ‘high impact social change’ enterprises in Pakistan, South Africa, Egypt, Tanzania and Kenya.
In India’s venture fund history, it’s a first for not just the public sector. In fact, such funds are known to stay away from medium growth social sector enterprises like high hospitals for low-income groups.
“The new JV targets high volume–low price business model adopted by Air Deccan,” Ananth Kumar, director of the newly incorporated Lifespring Hospitals Pvt Ltd, told FE.
In the current fiscal, the JV will set up five hospitals in Andhra Pradesh. Next year, another 10 will be lined up in Maharashtra and Karnataka.
A recent study by Hyderabad-based Venture Intelligence on the economic impact of VCs on Indian businesses had found that VC-backed companies grew faster compared to non-VC backed peers. Not only that, VC-supported businesses also did better than benchmark indices like the NSE Nifty.
Lifespring Hospitals is also eyeing stategic tie-ups. “Acumen Fund is capable of winning international strategic alliances for the chain of low-cost high quality hospitals,” says Kumar.
As a private entity, the new JV is expected to give Hindustan Latex a flexibility that its PSU mantle often deprives it of.
The new entity will have two directors from the New York-based fund and Hindustan Latex each. The chairman of Lifespring Hospitals Pvt Ltd, however, is M Ayyappan who is also the chairman of Hindustan Latex.