Somerset Indus Capital Partners’ healthcare portfolio sees 10X return on diagnostics bets

Diagnostics has emerged as the strong segment within Somerset Indus Capital Partners' healthcare portfolio, with investments generating a 10.34-times return on capital, the highest across all sectors in the fund.

A significant share of that performance comes from Krsnaa Diagnostics, which operates one of India's largest public-private diagnostic networks.

Somerset first invested in Krsnaa in 2015, when the company ran several hundred centers under state tenders. The firm added capital in 2017, helping fund new laboratories, imaging centers and a central tele-radiology hub as Krsnaa expanded aggressively through National Health Mission partnerships.

Between 2018 and 2020, Krsnaa scaled from a few hundred facilities to thousands as more states outsourced MRI, CT, X-ray and pathology services. The company's contracts with state governments, largely under the National Health Mission, allow it to run diagnostic services inside district hospitals and other public facilities at 70% to 90% below prevailing private-sector prices. Volume is guaranteed through public-hospital patient flow.

By the time Krsnaa launched its IPO in August 2021, it had become one of India's largest public-private diagnostics players. Somerset partially exited during the offering and completed its full exit through secondary market sales by 2023.

The company runs a central tele-radiology hub that interprets imaging studies from across its network, enabling round-the-clock reporting and standardised quality, according to Somerset's latest Impact and Sustainability Report. The hub-and-spoke structure helps consolidate operational costs, particularly for high-value modalities such as CT and MRI.

Krsnaa now operates more than 5,000 centers, processing tens of millions of annual tests. High utilisation of installed equipment, combined with lower test prices and contract-driven demand, forms the basis of its economics. For Somerset, the stability of state contracts and the asset-heavy nature of diagnostic equipment provided clearer cash-flow visibility than other healthcare segments, explaining why diagnostics delivered the fund's strongest returns.

For Somerset, the investment cycle, entry in 2015, follow-on in 2017, scaling through state partnerships, partial monetisation at the 2021 IPO, and final exit by 2023, explains how PPP-driven diagnostics became one of the firm’s most significant value-creation stories.

Founded in 2009, Somerset Indus Capital Partners is a Mumbai-based private equity firm that invests in India's healthcare sector. Its key investments include Cyrix and Ujala Cygnus Hospitals.