Healthcare-focused PE firm Somerset Indus Capital exits 9-year-old bet

Somerset Indus Capital Partners, a healthcare-focused private equity (PE) firm in India, has sold its 10% stake in Hexagon Nutrition to undisclosed buyers. 

Somerset confirmed the development. 

In December 2021, Hexagon Nutrition filed preliminary documents to the public to raise upto Rs 600 crore through an initial public offering. However, due to market volatility, the IPO plans did not materialise at the time.

A person close to the development said, “The company is trying its luck again to go public, and they are looking to consolidate the investor base by providing them liquidity.” 

Somerset Indus invested Rs 25 crore in Hexagon Nutrition in 2016. 

The investment has generated over 3.5 times said the spokesperson without divulging in detail. “It is a structured transaction so the entire consideration amount can’t be disclosed,” the spokesperson added. 

A structured transaction is a complex financial arrangement using multiple instruments to achieve specific goals like risk management, tax efficiency, or regulatory compliance.

The development was first reported by DealStreet Asia.

Founded in 1993, Hexagon Nutrition initially specialised in micronutrient formulations. Over the years, it expanded its focus, establishing a strong presence in the health, wellness, and clinical nutrition sectors. The company is known for brands such as Pentasure, Obesigo, and Pediagold.

Somerset Indus primarily invests in healthcare businesses catering to Tier II and III cities and lower-income populations. The firm made six investments from its first fund, which closed in 2012 with a corpus of $27 million. In 2019, it raised $76 million for its second investment vehicle.

Currently, Somerset Indus is raising approximately $250 million for its third fund, having achieved its first close at $86 million last year.

Recently, the PE firm roped in the Swiss Investment Fund for Emerging Markets (SIFEM) as its limited partner. The Swiss investor has committed $15 million (around Rs 130 crore) to the fund. It also roped in the US International Development Finance Corporation (DFC) as an LP for Somerset Indus Healthcare India Fund III.

SIFEM is Switzerland’s development finance institution. It primarily provides long-term financing through local financial intermediaries to small and medium-sized enterprises in developing countries. 

Exits

Somerset Indus has successfully exited multiple investments. One of its most notable exits was from Krsnaa Diagnostics, a diagnostics service provider. Somerset invested in the company in 2015 and 2017, helping it expand its diagnostic services across India, particularly in underserved regions. The firm made a partial exit during Krsnaa’s initial public offering in August 2021 and fully exited in May 2023.

Another key exit was from Express Clinics, a chain of multi-specialty clinics. Somerset invested in the company in 2012 and successfully exited two years later in 2014. Similarly, the firm backed Sandor Medicaids, a manufacturer of medical disposables, in 2011 and exited in 2016. 

The fund also exited Cygnus Hospitals, a network of specialty hospitals focused on Tier II and III cities. After investing in the company in 2013, the firm made a partial exit in 2019 and completed its full exit in 2024. This investment aligned with Somerset’s strategy of improving healthcare accessibility in smaller cities.