In April, when Multiples Equity founder Renuka Ramnath said she was hitting the road to raise a new $1 billion fund, it was time for reflection. The private equity firm, arguably at its gilded peak, is raising its third fund in eight years, each progressively bigger than the last. Now, as the $405 million first fund nears its end—most private equity funds have eight-year terms—one investment stands out. Its $31 million bet on Vikram Hospitals.

By investing in Vikram Hospitals in 2013, a Mysore-based hospital chain founded by doctor-entrepreneur Dr SB Vikram, Ramnath was buying out ICICI Ventures’ stake, an investment she had led five years prior when she helmed that venture fund. As the largest Indian private equity at the time, ICICI Ventures had a majestic pan-India healthcare plan. When ICICI’s plans went awry, Ramnath’s Multiples not only gave them an exit, it also infused fresh funds in the hospitals in that year, FY13, which grossed Rs 70 crore ($10.3 million) in revenue, over a loss of Rs 31 crore ($ 4.5million).

Ramnath perhaps had a blueprint to spur the hospital on to glory. Her former colleagues say she was also the “best equipped” to build it out. It was a time when hospital investors were exiting thick and fast. In 2013, PEs exited Apollo Hospitals and Medanta with 3X and 4X returns respectively. The sector was in the pink of health; the number of exits had risen from three in 2012 to nine in 2013.

Multiples eventually bought out the promoter’s shares in the Bengaluru hospital, which was hived off from the chain, committing $31 million, nearly 8-10% of her fund. By the end of 2015, it owned 100% of the 200+ bed hospital,

One would’ve thought Multiples would double down and bring to bear the dream Ramnath had at ICICI Ventures. There, Ramnath, along with her colleague Aluri Srinivasa Rao, had built a special purpose vehicle to aggregate disparate healthcare investments into a single platform brand. Called, I-Ven, it was so promising that healthcare giant Aster DM (then only a secondary care clinic operator in Dubai) was willing to give an arm and a leg in order to acquire it.

Instead, Multiples put the hospital up for sale in 2016, with little success.  And the PE has not made any hospital investment since. Curious?

Allow me to digress a little. In “Silver Blaze”, one of the short stories in the Memoirs of Sherlock Holmes by Sir Arthur Conan Doyle, a famous racehorse disappears the night before a race and the horse trainer is found murdered. Holmes solves the mystery by focusing on the absence of the expected, that no one heard the watchdog bark in the night.

Scotland Yard detective: “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the night-time.”

Gregory: “The dog did nothing in the night-time.”

Holmes: “That was the curious incident.”

The dog not barking led Holmes to conclude that the perpetrator of the crime was not a stranger to the dog.

AUTHOR

Seema Singh

Seema has over two decades of experience in journalism. Before starting The Ken, Seema wrote “Myth Breaker: Kiran Mazumdar-Shaw and the Story of Indian Biotech”, published by HarperCollins in May 2016. Prior to that, she was a senior editor and bureau chief for Bangalore with Forbes India, and before that she wrote for Mint. Seema has written for numerous international publications like IEEE-Spectrum, New Scientist, Cell and Newsweek. Seema is a Knight Science Journalism Fellow from the Massachusetts Institute of Technology and a MacArthur Foundation Research Grantee.

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