India: HCL’s Shiv Nadar, Sanjay Kalra set up $500m fund to buy US health tech firms

HCL Tech founder and chairman Shiv Nadar (left), SNSK chairman Sanjay Kalra (right). Photo sourced from SNSK website.

HCL Technologies founder and chairman Shiv Nadar has teamed up with former Tech Mahindra CEO Sanjay Kalra to set up a $500-million fund to acquire mature healthcare technology companies and invest in IT products and platforms in the US, according to a statement.

The proposed funds will be raised through investment firm Shiv Nadar & Sanjay Kalra Associates (SNSK) that was incorporated by the duo earlier this year. Billionaire Nadar and Kalra will together infuse $200 million in the fund, while the remaining $300 million will be raised through debt.

The fund will be utilised to buy out IT product and platform companies across providers, payers, pharma & life sciences, which are either disrupting or being disrupted by the confluence of regulatory changes, evolving consumer attitudes, changing demographics and emerging technologies, the statement said.

The move to establish the fund has triggered from the Affordable Care Act (ACA), or Obamacare in popular parlance, that aims at bringing low-income uninsured Americans under the government’s medical programme. The act, that came into being five years ago, also meant a huge opportunity for Indian IT services companies in providing technical support to insurance marketers and hospitals.

Shiv Nadar, Chairman, HCL and Mentor, SNSK, said, “The U.S. healthcare industry is undergoing radical transformation with the Affordable Care Act. Evolving thought and business models have little semblance to present mechanisms. Over the next five years, SNSK aspires to be an engine of accelerating digital solutions that would make patient care more accountable, efficient, predictable and effective.”

This will probably be the first time that Nadar, 70, will invest a portion of his $12.9-billion wealth towards acquiring global assets in the technology space. SNSK has already begun talks with the potential acquisition targets in the US healthcare sector.

Talking on the strategic approach of the new entity, SNSK chairman Sanjay Kalra said, “SNSK is an operating team with capital. Our relationship capital, trust and Shiv as a mentor are the most valuable elements we bring to our portfolio companies. We will support management teams to unlock value in their companies through our entrepreneurial passion, engineering heritage and global operating experience.”

Most Indian IT service providers currently bank on offerings like infrastructure services, cloud, analytics and BPO services in the US, with the exception of Indian software service providers like HCL, TCS and Wipro.

In February last year, HCL announced its foray into the healthcare sector by launching HCL Healthcare in partnership with Johns Hopkins Medicine International of the US. With an initial investment of Rs 1,000 crore, HCL Healthcare aimed to reach out to 20 million patients, mostly from India’s growing middle-class, by 2020.

Earlier this year, Wipro had also hired senior executives from rival firms as it chases its longer-term goal of $2 billion of revenue and targets acquisitions in the $100-200 million in the healthcare space in the US. The company counts Johnson & Johnson and Catholic Health Initiatives among its top clients.

The US healthcare industry is currently going through a radical transformation with the ACA in place. According to CMS, healthcare expenditure in the US is projected to hit $3.207 trillion this year. With the US population currently hovering at around 320 million, the healthcare spending will reach $10,000 per person for the first time in 2015.

 

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.