Healthy Returns

Your client is a private equity fund considering an investment in a 1,000-bed hospital in Gurgaon. The fund is targeting a 25 percent return on investment, and profit needs to become three times its current level within five years. How would you evaluate whether this is an attractive investment and what needs to be true to achieve the target?

Establish whether the hospital can plausibly triple profit within five years and whether the resulting cash flows and entry valuation can deliver the fund's target return.