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PE cos set their sights on wellness sector

The over 11,000-crore luxury, beauty and wellness sector is set to attract significant investor interest as private equity firms look beyond core sectors for investment.

“The wellness sector in India is attracting new players as well as private equity funding, and it is a natural progression considering the phenomenal growth across verticals in this space,” slimming and wellness chain VLCC Healthcare MD Sandeep Ahuja said.

The Delhi-based company received investments from Indian as well as international investors and total private equity investments in the company currently are over $43 million.

As per a report by FICCI-Ernst and Young in 2009, India's wellness market is expected to grow at about 30-35% year-on-year due to rising consumerism, globalisation and changing lifestyles. Rising disposable incomes, increasingly demanding and stressful work-place conditions and sedentary lifestyles are the growth drivers for the wellness industry. “The definition of wellness has changed from luxury to necessity as it is now a need for all ,” said Ahuja.

Investors are sensing a big opportunity in the wellness sector where less than 5% of the market is being serviced by organised players. Investors can derive immense value from the sector which is catering to a far large target audience than just being a niche offering as was the case earlier,” Venture Intelligence MD Arun Natarajan said.

“This space throws open investment opportunities for both private and venture capital firms as investments firms in general are looking at sectors driven by consumer spending in a big way,” he added. While there are firms like VLCC which can attract private equity funding as it is already an established player in the market, some start ups often require seed capital to go ahead with their plans.

A host of Venture capital firms that have funded start ups in the wellness space the past include Accel India's $2.5 million investment in a health and wellness portal HealthCareMagic. Helion Venture Partners invested 20 crore in You Look Great, a chain of salons and spas set up in 2009 by ex-employees of Future Group .

“The health, beauty and fitness sector is showing healthy growth rates. Since in the fitness segment, service orientation is critical, it is very difficult for a big player to start from ground up,” said Helion Advisors' VP Rahul Chowdhri.

Investor interest in this space has also increased after the listing of Mumbai-based Talwalkars Better Value Fitness , which owns one of the largest and oldest fitness chains in India. UK-based health club Fitness First, which forayed into India in 2008, has got funding worth from venture capital firm Pi Capital.

Source: Economic Times

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