HCL Founder and Chairman, Shiv Nadar along with his former employee and former CEO of Tech Mahindra, Sanjay Kalra has set up $500 million fund to acquire US based healthcare technology companies offering IT products and platforms in digital healthcare.
The fund is called Shiv Nadar & Sanjay Kalra Associates (SNSK) in which $200 million are personal investment by Nadar and Kalra with former contributing 80% of share and rest of the $300 million are from debt whose sources remain undisclosed.
The main objective behind the fund, as per Nadar, is to invest in mature IT companies in the US healthcare IT sector; transform them through operating expertise, through capital investment and recapitalization by also growing their markets.
We are operating professionals with capital. We will be involved in the companies that we acquire and invest in, we will bring our entrepreneurial passion, our network of global relationships, use India-based R&D capabilities, and globalize the solutions that are developed,
said Kalra in a statement.
Apart from it, the fund which is primarily targeting buyouts in the range of $50-$200 million, will also be used for selective investment in Indian startups to help them leverage the experience and expertise of the US companies acquired by SNSK. Not much info was however made available about fund’s this aspect.
This move by the entrepreneurial duo aims to take advantage of the recent Affordable Care Act in the US, also known as ObamaCare which has made the entry of new organizations in the sector easy by bringing down the entry barriers for new companies.
US healthcare IT market makes up 16-17 % of the US GDP which amounts to almost USD 3.2 trillion. By considering about 320 million population of the country, the average expenditure per person on healthcare has climbed up to $10000 for the first time.
This has made this segment an attractive option for new investors, especially after the implementation of ACA. There are many Indian IT companies as well such as Infosys, Wipro, TCS and Tech Mahindra looking forward to grab a slice of pie in the US healthcare vertical but they are majorly focussed on IT services as opposed to SNSK which will focus on IT products and platforms.
With all new changes in regulations etc., suddenly a fresh industry is emerging. New IPs and software platforms are going to play a key role in this transformation,
added Sanjay Kalra.
As far as exit strategy of the firm is concerned, SNSK investments will be for the long term and according to Kalra, funds won’t be driven by the typical end of the fund cycles. To oversee major functions of SNSK based in the US, Mahesh Nagaraj, a vice-president at Tech Mahindra has been made its MD of this venture in addition to hiring of another serial entrepreneur Vineet Jawa in the team.