RHT HEALTH TRUST: Taps into Pulse of Indian Boom

RHT Health Trust has a portfolio valued at S$1.1 billion, with 12 clinical establishments, 4 greenfield clinical establishments and 2 operating hospitals in 13 Indian states. (Image: Company)

Gurpreet Dhillon's salt-and-pepper look lends him clout beyond his years.

The 32-year-old was appointed Chief Executive Officer of Religare Health Trust Trustee Manager, which manages Singapore-listed Religare Health Trust (RHT), three years ago.

"I think I have too much white hair for my age," Dhillon said, his tongue firmly in cheek.

"I became CEO at 29, and now, I can't imagine myself doing anything else with my life. Running RHT - that's my passion," he added.

In fact, Dhillon has little time to spare for anything other than managing the operations of the trust.

"Every three to four months, I start guitar lessons again, but that always gets sidelined. I'm either at work, travelling, or spending time with my kids," said the father of two boys, aged four and one.

Dhillon served as the Chief Operating Officer of the Trustee Manager for five months in 2013 before taking the helm.

Prior to that, the Bachelor of Law graduate from University of Essex gained investment and asset management experience during his stint in Religare Capital Markets Plc, the investment banking arm of Religare Enterprises Ltd, where he played key advisory roles in real estate acquisitions across India and the UK.

RHT's unique offering - providing stability as well as growth - is Dhillion's constant source of inspiration.

"We have been able to put in place a product that gives investors access to growth, without the volatility that accompanies investments in emerging markets," he said.

"If we can continue to demonstrate that we are this island of calm in a sea of volatility that is India, yet able to capture the strong growth inherent in the country, it would be very interesting to anyone looking to deploy capital in the emerging markets."

Key growth drivers include a burgeoning middle class and an evolving disease profile, Dhillon noted.

Age- and lifestyle-related illnesses - including cancer, diabetes and cardiac disease - are on the rise, due to urbanisation, changing diets, widespread tobacco use, and increasing obesity levels. India has one the world's highest number of diabetes sufferers, at more than 65 million individuals, data from Deloitte showed.

Rural India, which accounts for over 70% of the population, is also set to emerge as a potential demand source. The doctor-to-patient ratio for rural areas, according to Health Ministry statistics, stands at 1:30,000, well below the World Health Organization's recommended 1:1,000 ratio, the IBEF report stated.

RHT Health Trust's clinical establishment at Gurgaon.
(Image: Company)

"The demand-supply gap is quite substantial - in most Indian cities, there is a huge shortage of hospital beds. We continue to see growth opportunities in this underserved market," he added.

According to policies put in place by Prime Minister Narendra Modi's government, the healthcare industry is one of the few sectors in the country with no foreign direct investment limits.

"Over the last couple of years, we've seen quite a few investors from the private sector pumping money into the healthcare sector, including TPG, Carlyle, Temasek and GIC," Dhillon said.

The Indian government is also rolling out a universal health plan that aims to provide free drugs, diagnostic services and insurance for serious ailments.

In its latest 2016-2017 Budget, the government said it would provide health insurance of up to 1 lakh (or one hundred thousand) rupees per family, and an additional top-up package of 30,000 rupees for senior citizens aged 60 and above, as part of its health protection scheme.

It is also giving higher income tax deductions for private healthcare insurance, which would in turn drive increased health insurance penetration and patient volumes.

What India needs to do is build better supporting infrastructure for critical care patients arriving in the country and travelling to their respective hospitals for medical treatment.

- Gurpreet Dhillon
CEO

RHT Health Trust

Now that RHT has established a stable growth base, it is looking at expanding more aggressively through organic and inorganic means.

Even without venturing outside its portfolio, the trust has grown its pipeline to 2,600 beds currently, from 1,700 beds four years ago. It has a total capacity of 5,800 beds, and is actively focusing on projects that will add 900 beds over the next two to three years, Dhillon said.

It is also working with operators to add medical programs that can raise revenue per bed levels, such as oncology services.

Amritsar Clinical Establishment is a multi-specialty hospital, located in the north eastern part of Amritsar. Its key specialties are cardiac sciences, neurosciences, urology and nephrology, medical and surgical gastroenterology, medical and surgical oncology, orthopaedics and joint replacement. (Image: Company)

"Our day-to-day focus is organic, on our brownfield projects, where we add capacity to our existing CEs," Dhillon added.

At the same time, RHT is on the lookout for suitable acquisitions. "We want to take advantage of our low gearing of 19%, and we have a long way to go before we reach our targeted 30% to 35% level," he added.

RHT's first acquisition since its listing was the purchase of Mohali CE, located in the well-connected and growing state of Punjab, in May 2014.

Key criteria for evaluating an M&A deal include quality of the operator, location of the CE, and whether it is yield-accretive for unitholders.

"Most of our due diligence is done on the operator rather than the asset - because the asset has natural downside protection, and we examine factors like historical financials, reputational risk and type of medical services offered," Dhillon said.

RHT's focus on one single operator - Fortis Healthcare - does carry some risk, despite the fact that Fortis is India's largest operator.

"We are excited to work with Fortis, but at some point, we want to work with another operator, to diversify away from the single-operator risk," he added.

After Fortis, India's second-largest operator is the Apollo Hospitals Group.

Dhillon's two-pronged strategy of ensuring stability and growth for unitholders exemplifies management's emphasis on transparency and performance.

"We are one of the few business trusts trading above our listing price, and that is a function of the sector we are in, as well as the way we have been able to approach Indian healthcare," he said.

"We have created a product that is inherently stable, one that is not impacted by macroeconomic volatility, and yet is tuned into the robust Indian growth story."

• Slowing growth in major economies, coupled with volatility in interest rates and foreign exchange, signal challenging times ahead.
• Despite the uncertain outlook, healthcare is one of the few sectors where demand is fairly consistent, regardless of the economic situation. To further augment the stability in demand, RHT's Clinical Establishments (CEs) provide specialty medical treatments that are generally non-elective, and operate in geographical locations where demand for hospital beds exceeds supply.
• To-date, management has been consistent in its strategy of expanding capacity in its existing CEs, and undertaking refurbishment works to cater for increasingly more sophisticated medical treatments. New CEs will be opened in the next financial year, and more advanced medical programmes will be introduced at various existing CEs when development works are completed.