BPEA EQT to acquire India’s largest fertility services provider Indira IVF

Hong Kong-headquartered investment firm BPEA EQT will acquire a majority stake in India’s largest fertility services provider Indira IVF for an undisclosed sum.

BPEA EQT is part of EQT, a Swedish global investment firm. BPEA EQT combines the private equity teams from Baring PE Asia (BPEA) and EQT Asia. EQT announced on Friday that BPEA EQT has agreed to acquire a controlling stake in Udaipur headquartered Indira IVF from TA Associates and the company’s founders – Dr Ajay Murdia, Dr Kshitiz Murdia and Dr Nitiz Murdia, who will retain a significant minority stake and also continue to lead the company.

Boston, Massachusetts-based TA Associates owned a 47 per cent stake in Indira IVF. The promoters held 53 per cent. In January, Bloomberg had reported that TA Associates was looking at monetising its stake for a valuation of around $1 billion. However, there is no clarity on the final valuation of Indira IVF. Reports have suggested that the chain could be valued in between Rs 8,000-10,000 crore.

Ajay Murdia had founded Indira IVF in 1988. Since then it has scaled from a single clinic to a pan-India network of 116 centers across 20 states. It is the market leader within assisted reproductive technology (ART) services in India and completes roughly 40,000 IVF cycles annually. It also ranks among the top five players globally. To date, Indira IVF has successfully supported over 125,000 couples in their journey towards achieving pregnancy.

“Fertility services and reproductive health is a large and fast-growing opportunity in India and Indira IVF is a pioneer in this space. We see strong potential in further expanding Indira IVF’s presence across India and entering adjacent markets while continuing to invest in its R&D capabilities and technology, drawing on EQT’s in-house expertise within healthcare and digitalisation,” said Ashish Agrawal, partner at BPEA EQT.

Dr Kshitiz Murdia, CEO of Indira IVF, said that the partnership with BPEA EQT is the beginning of a new phase.  Indira IVF chain of fertility clinics now enjoys a 16-17 per cent share of the IVF market in India. Indira IVF is eyeing a 20-25 per cent growth. It posted a turnover of Rs 1205 crore for FY23, with an Ebitda margin of 30-35 per cent.

Each IVF cycle costs around Rs 1.7-2 lakh, and another Rs 1-1.5 lakh during the nine-month pregnancy. India is one of the fastest-growing markets globally for ART services and is significantly underpenetrated compared to more developed markets. Infertility rates in India are estimated to be around 15 per cent and they are expected to rise, driven by lifestyle changes, such as poor diets, stress levels, and pollution.

Today, India completes around 300,000 IVF cycles annually, and over the next decade, the number of cycles done across the country is expected to grow around 15 per cent at a compound annual growth rate. This trend is supported by the rising awareness about infertility treatments, the growing middle class, declining fertility rates, and increasing marriage age.

Jimmy Mahtani, partner and co-head of BPEA EQT India, concluded, “This investment aligns with EQT’s commitment to investing in companies that address critical societal needs and have the potential to impact people’s lives for the better.” BPEA EQT was advised by JSA (legal), Lincoln International, Price Waterhouse & Co LLP (transaction and tax, operational DD), Deloitte (financial and tax DD, structuring, ESG), and Awelin (digital). The selling shareholders were advised by Goldman Sachs and JP Morgan.

With this transaction, BPEA Private Equity Fund VIII is expected to be 35-40 per cent invested (including closed and/or signed investments, announced public offers, if applicable, and less any expected syndication).

 INDIRA IVF Financial Numbers:

Revenues

o    FY23: Rs 1205 crores

o    FY22: Rs 928 crores

o    FY21:  Rs659 crores

o    FY20: Rs 835 crores

o    FY19:  Rs 663 crores

–          CAGR: For FY15 to FY21 is 54%

–          R&D expenditure of Rs 1 crore per year related to Indira Fertility Academy

–          Revenue estimated for FY24: Rs. 1450 – 1,500 Cr

Gross Margin is around 70% over last 05 years

The EBITDA margin over the last 05 years period is 30%.

Source: Company