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Funds Syndication: Best way to convert your Small Healthcare organisation to Big
Tarun Katiyar
Principal Consultant,
Hospaccx India Systems |
Funds Syndication in a nut shell: A syndicated loan is one
that is provided by a group of lenders and is structured, arranged, and administered
by one or several commercial banks or investment banks known as arrangers. In
other words, it is a way of arranging funds for an individual (Borrower) by
a group of people (Lenders)
How can any healthcare set-up benefit from it?
 Even
a small health care center or a diagnostic center can raise the fund through
fund syndication and the best part of it is that they find active partners in
terms of investors who can directly or indirectly support the center in increasing
the revenue. Fund allocation purely depends on the need of the borrower.
What kind of healthcare centres will be able to avail this
service?
All kinds of healthcare centres ranging from a small nursing home to a chain
of diagnostic centres, day care centres, corporate hospital, chains of clinics
etc. will be able to avail this service.
What are the criteria a borrower should fulfil in order
to be eligible for funds syndication?
The borrower should have a self-sustainable business with a good brand name
in that particular region for the last 5-10 years.
How is it different from loans of financial institutions
or term loan?
Loans from financial institutions require one to go through tedious procedures
and is time consuming. Moreover, the financial institutions offer the loans
based on your credit history and other related details.The most important part
is that the bank is only partner in profit but when it comes to fund syndication
they are partners in the loss also as they are partner in the business. Funds
Syndication is more prevalent in US and European markets.
What are the merits of syndicated funds?
 Syndicated
funds offer significant merits over other investment options.
- Less paper work required as in a Loan from Financial Institutions, No tedious
procedures involved.
- Financial risk involved is limited as it is equally borne by all the investors.
- Less risk involved when it comes to the borrower as risk is divided among
all.
- Best merit is that the funder also become a promoter for your business and
directly or indirectly he increases your revenue. Best example is when the
investors are a group of doctors for a diagnostic center - Patient referral
becomes easy, thereby indirect inflow of patients from the investors is seen.
What are the demerits of syndicated funds?
As all the other loan/investment related options have certain demerits involved,
Funds syndication is no different either. But, it outweighs the other option.
- As the investors are a group of people, they tend to influence decision
making in the organisation.
- Transparency is always an issue in such cases.
- The client should have a self-sustainable business module.
Why is this required for smaller healthcare set-ups?
Sometimes smaller set ups/organisations do not have enough financial credentials
to be presented before the bank, which makes it difficult for them to secure
sufficient funds for their needs. Whereas, funds syndications do not have any
such issues to deal with.They can use their capex in expansion or marketing
of their services.
Conclusion
Any small diagnostic center, polyclinic, nursing home or a day care center which
is looking forward expansion in massive mode. Fund syndication is a useful tool
for them to reach the destination.
(For more information contact at tarun.k@hospaccx.in)
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