New Delhi, May 13 -- Swedish private equity firm EQT and multi-stage investment firm Norwest Venture Partners have entered the race to invest in a hospital operator, as controlling shareholders look to pare their stakes, according to two people familiar with the matter.

EQT, which is investing out of its new Asia-focussed PE fund, and Norwest Venture are competing to invest in Kids Clinic India Ltd, the operator of the mother and childcare hospital chain Cloudnine, the people told VCCircle, requesting anonymity.

The transaction is part of Cloudnine Hospitals' ongoing private equity fundraise, which will include a mix of primary and secondary capital infusion of $100-125 million (Rs 956-1,195 crore), they added.

Existing investors, Singapore state investment firm Temasek and private equity firms True North and TPG NewQuest, are expected to pare their stakes as part of the deal.

Temasek, EQT, TPG NewQuest and Norwest Venture declined to comment. Queries sent to True North and Cloudnine remained unanswered till the time of publishing.

Temasek and TPG NewQuest have sought wider participation from investors and initiated a fundraising process that could see them collectively sell a 20-30% stake to incoming sponsors, according to a report in The Economic Times. The report said the equity raise is part of efforts to scale Cloudnine's operations.

EQT and Norwest are looking to deepen their exposure to India's healthcare sector with the potential deal. EQT's healthcare portfolio in India includes Hyderabad-based AIG Hospitals and fertility chain Indira IVF, while Norwest has backed radiology services provider Nueclear Healthcare, Uttar Pradesh-based multispecialty hospital operator Regency Health, and diagnostics company Thyrocare.

Cloudnine, founded by neonatologist R Kishore Kumar, Rohit MA, M Ramachandra and Vidya Kumar, operates in the maternity and childcare segment. It competes with Indira IVF, Motherhood, Rainbow Hospitals, Lifespring Hospitals, Apollo Cradle, as well as larger multispeciality chains such as Fortis Hospitals and Max Healthcare.

Between FY23 and FY25, the company raised around Rs 695 crore from investors. In 2023, Temasek and TPG NewQuest invested about Rs 417 crore, according to VCCEdge, the data and research platform of VCCircle. Temasek was also reportedly looking to acquire Peak XV Partners' stake in Cloudnine late last year, though it is unclear whether that transaction was completed.

Since FY20, Cloudnine has remained operationally profitable but has recorded net losses. In FY25, consolidated revenue jumped 25% to Rs 1,485 crore, while net loss widened to Rs 46.5 crore from Rs 28 crore a year ago, as per VCCEdge. EBITDA increased over 16% to Rs 220 crore in FY25.

The company has been expanding its network with new hospitals each year. Since starting as a single hospital in Bengaluru in 2006, Cloudnine has grown to around 40 hospitals across India. In FY25, it added seven centres and plans to invest more than Rs 200 crore to open a similar number this year, VCCircle reported earlier.

Cloudnine is also reportedly in talks to acquire Apollo Cradle from Apollo Hospitals Enterprises Ltd.

Women's and children's healthcare has seen rising investor interest in recent months.

In January, Danish investor Novo Holdings, the controlling shareholder of Novo Nordisk, acquired a significant minority stake in Mumbai-based Surya Hospitals, which operates in women's, neonatal and pediatric care.

Meanwhile, several multispecialty hospital chains are increasing their focus on the segment. Asia Healthcare Holdings' Motherhood Hospitals plans to open five new hospitals in FY27, while consolidating operations in Bengaluru, Indore, and Coimbatore. Aster DM Healthcare also launched a new women and children's hospital in Hyderabad in 2024.

Published by HT Digital Content Services with permission from VC Circle.