Somerset Indus Capital Partners closes its third fund

Somerset Indus Capital Partners has emerged as an active private equity investor in India’s growing healthcare sector, focusing on access and affordability primarily in the Tier II and III markets.

Over the past decade, the Mumbai-based firm has invested in 15 portfolio companies, many led by first-generation entrepreneurs, to expand affordable and quality healthcare across under-served regions. It manages assets of around $500 million across three funds.

Fund III, which is in the final stages of its close, is expected to exceed its $250 million target. It has attracted commitments from European and US development finance institutions, global investment companies, domestic banks, and impact-focused investors from Europe and Southeast Asia. The fund aims to invest in healthcare businesses that address gaps in accessibility and affordability.

Earlier, Somerset announced a full exit from Apex Hospitals in Rajasthan, after the investment delivered a 4x return. The firm had helped Apex launch tele-health and E-ICU services and establish a cancer care centre of excellence.

The firm’s past investments include Krsnaa Diagnostics, which has grown into one of India’s largest

providers of affordable diagnostic services, and Ujala Cygnus Hospitals, which has expanded low-cost tertiary care across northern India.

Apart from hospitals and diagnostics, Somerset also finds pharmaceuticals and life sciences “attractive”. Medtech manufacturing is another promising area, says Ramesh Kannan, Partner at Somerset Indus Capital Partners. “India imports most of its equipment; so ‘Make in India’ is a big theme. Surgical robotics is emerging as well,” he adds.

While there are several promising opportunities for growth and investment, Kannan believes healthtech hasn’t scaled yet, largely because it’s unclear who ultimately bears the cost. In traditional healthcare, it’s obvious who pays—the patient, the insurer, or the government. In healthtech, however, costs and benefits are often misaligned.

For outpatient services, hospitals may cover the cost of screening or equipment, expecting revenue only if a positive diagnosis leads to more intensive treatment. For inpatient care, insurance and government reimbursements require pre-approval and fixed rates, slowing adoption unless the technology demonstrably reduces costs or improves outcomes, Kannan explains in an interview.

He also talks about current investment trends in healthcare, the ongoing consolidation across the sector, and the firm’s approach to its next phase of growth. YourStory