INDIA – Tata Capital Growth Fund, a leading mid-market private equity fund, is set to acquire a minority stake in a multi-center diagnostic chain Aarthi Scans Pvt. Ltd.

The transaction is expected to get consummated in the next few days.

Founded by V. Govindarajan in 2000, the Chennai-headquartered Aarthi Scans & Labs is the market leader in affordable and integrated diagnostics space in India.

Currently, the chain has more than 45 diagnostic centres and over 100 collection centres spread across 10 states of India including the top 6 metros.

The company plans to double its network by expanding in existing cities and entering other major metros.

Tata Capital Growth Fund is a US$240 million (approximately Rs 1,700 crore) private equity fund managed by Tata Capital, the financial arm of the Tata group that manages third-party capital raised from investors around the world.

The fund seeks to invest in companies that derive a significant portion of their revenue from operations in India. Aarthi Scans’ sole financial adviser was Veda Corporate Advisors in this transaction.

The pursuit of diagnostics assets by private equity firms demonstrates the country’s sustained investor interest in this space, particularly since the outbreak of the pandemic.

A number of diagnostics companies in India have matured with significant private equity funding over the years, and some have already gone.

In late 2015, Dr Lal PathLabs became the first diagnostics company to go public. Following suit were Thyrocare Technologies and Metropolis Healthcare.

Krsnaa Diagnostics and Vijaya Diagnostics, both backed by private equity, went public last year.

Last week, Motilal Oswal Private Equity (MOPE) said it will invest up to Rs 194.4 crore (around US$25 million) through its fourth fund in Mankind Pharma’s diagnostics venture, Pathkind Labs.

Earlier, Synapsica, an Indian radiology company, partnered with Aarthi Scans and Labs to deploy its ‘Spindle’ artificial intelligence (AI) assistant to provide spine magnetic resonance imaging (MRIs) for the diagnostic chain.

In MRI scans of the spine, Spindle automatically reports over 35 degenerative or age-related pathologies.

It provides highly objective and accurate radiology reports, as well as the necessary spinal measurements. This helps radiologists save nearly 70% of the time they spend on spine MRIs.

Spindle, unlike traditional MRI reports, can automatically identify key vertebral points and provides a detailed and standardized mensuration of various spinal elements.

It can also rapidly identify and report variations and pathologies, making it easier for radiologists and clinicians to diagnose and quantify the degree of degeneration.

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