Aster DM divests stake in Gulf business for $1 billion

29 Nov 2023 , 09:20 AM

Aster DM Healthcare Ltd, a leading hospital chain, said on Tuesday that it will split its flagship Gulf business and sell it to its Indian owners (Moopen family) and a Dubai consortium for $1.001 billion, a move that it claims will unlock shareholder value and attract more institutional investors.

Once the acquisition is completed, a consortium led by the United Arab Emirates (UAE) government-backed Fajr Capital will hold 65% of the Gulf firm, while Azad Moopen, the promoter of Aster, will own 35%.

Alpha GCC Holdings Ltd, a wholly-owned material subsidiary of Aster DM Healthcare, manages Aster’s operations in the GCC (Gulf Cooperation Council) countries.

The combined India and GCC businesses have a current market capitalization of $2 billion. According to the corporation, the deal values the GCC business at $1.7 billion (Rs 13,540 crore) in enterprise value and $1.001 billion (Rs 8,215 crore) in equity value. The agreement will help the Gulf Corporation pay off its debts.

Aster DM Healthcare will receive $903 million of the $1.001 billion. The majority of the profits will be distributed to Aster DM Healthcare shareholders as dividends, subject to board approval.

The remainder will be paid out if certain ‘contingent events’ occur, including an earnout of up to $70 million depending on EBITDA (earnings before interest, taxes, depreciation, and amortization) achieved by the GCC business in FY24, according to the firm.

The Gulf business accounts for 70% of Aster’s income, but it is a drag on the Indian company due to lower margins, according to founder Azad Moopen in an interview.

For feedback and suggestions, write to us at [e-mail]