Adani’s foray into healthcare

Adani Group is aiming to turn around its Corporate Social Responsibility (CSR) initiative in healthcare to a commercial scale, people familiar with the development have said. The company considers healthcare as a “massive growth area” for infrastructure and aims to heavily invest in the sector.

The indication is clear with billionaire industrialist Gautam Adani along with Apollo Hospitals Enterprise Ltd- an Indian multinational healthcare group evaluating bids to pick up a majority stake in Mumbai based diagnostic chain Metropolis Healthcare Ltd. Considering the market cap of Metropolis and its operations across India, the deal size could be around Rs 7,765 crore ($1 billion), people familiar with the matter said adding that the company may also look at a deal with Fortis healthcare.

Adani Group’s involvement in healthcare is now new. Adani Foundation is the CSR arm of the Adani Group which is committed to community health, along with other social areas like education. In terms of health, the foundation’s key focus is improving access to quality healthcare services for people from the grassroots level belonging to the weaker sections of society. It runs Mobile Health Care Units (MHCUs) across the nation, hospitals and clinics, and general as well as specialized health camps.

Also, Gujarat Adani Institute of Medical Sciences (GAIMS) is the first Public-Private-Partnership (PPP) initiative between Government of Gujarat and the Adani Education & Research Foundation. GAIMS is the only medical college and multi-specialty modern teaching district hospital in Kutchh District. GAIMS is part of Adani Group’s CSR initiatives, and is managed by Adani Education & Research Foundation, under the umbrella of Adani Foundation.

“The company is chalking out a plan of “exposure” into healthcare. What was being done under CSR initiative is being looked at as a business opportunity. Hospitals, e pharmacies, pharma companies, and diagnostic companies are good options for such an investment,” said a person familiar with the development. After the Q4 results, the company indicated that is going to invest in healthcare infrastructure.

“We are in two cores sectors of infrastructure, which are transport logistics and energy and utilities. As an infrastructure player, healthcare is a possible third infra which is for a growing country like India is a massive growth area for infrastructure. So, we have to evaluate whether we can develop a third-fourth infra platform,” said Robbie Singh, CFO, Adani Enterprises limited, post Q4 FY2022 Earnings Conference Call.

“Now we understand that, that is why better to start off with it. It is likely to be a partnership, so it is not like something that we will do ourselves, so that is the first part of it. It is a core infra for India and we will stay with the core of India yes, it is the new infra vertical we will look at but that is as a growing group being able to deploy capital will continue to deploy capital to the core infra, that is number one, he said. Singh further said that in addition, to cement and all, it is too early to comment but once we are ready with it or we actually have formal announcements in relation to how we visualize this in the medium term.

Health and pharma analysis holds that Adani Group is diversifying its business portfolio in all possible ways, health being a lucrative business. “Adani is a cash-rich group looking to diversify into high EBIDTA opportunities. Healthcare is perfect. With a $4B thrust, the group has ambitions to play in every possible service in the industry. They propose to open diagnostics facilities, hospitals, and research centers. These are unlikely to be standalone facilities and are more likely to be a healthcare ecosystem/platform that provides end-to-end services for customers. We can look forward to acquisitions of diagnostic companies, hospitals, and other health tech services,” said Salil Kallianpur, former executive vice president of GSK Pharma, and now a pharma industry analyst.

Adani Enterprises on 18 May had announced that it has incorporated a wholly-owned subsidiary Adani Health Ventures to run and administer medical and diagnostic facilities, health aids, health tech-based facilities, research centres and allied activities.

“With reference to the captioned subject, we would like to inform you that Adani Enterprises Limited has incorporated a WOS namely, Adani Health Ventures Limited (“AHVL”), on 17th May 2022, with an Initial Authorized and Paid-Up Share Capital of Rs. 1,00,000/- each…AHVL will commence its business operations in due course,” the company had said in a regulatory filing. Adani Group’s expansion and entry into healthcare sector came soon after he had announced the acquisition of Holcim’s assets Ambuja Cement, and ACC that made the conglomerate the second largest player in the cement sector.

Response to an email query sent to Apollo Hospitals and Adani Enterprise is awaited. Metropolis didn’t comment on the development. Business Today