Aster DM Healthcare’s promoters may be looking to sell India business

7 Jul 2023 , 11:28 AM

According to news reports, the promoters of Aster DM Healthcare, led by Azad Moopen, have initiated discussions with private equity firms such as KKR and Blackstone regarding potential stake purchases in the company. The promoters may be open to selling a majority stake in their chain of hospitals, which is listed on the Indian stock exchange, to capitalize on ongoing sectoral consolidation.

Aster Healthcare operates 32 hospitals, 127 clinics, 521 pharmacies, 16 labs, and 189 patient experience centers across seven countries in West Asia and India. The company has expanded its facilities significantly in recent years, increasing the number of hospitals, clinics, pharmacies, and labs from 300 in 2017 to over 885 in FY23. India contributes 29% of the company’s EBITDA and 25% of its revenues for FY23.

The discussions are expected to gain momentum after the separation of Aster’s Gulf operations, with a reported 65% stake being sold to a group led by Dubai-based private equity firm Fajr Capital for $500 million. These preliminary negotiations may or may not lead to a transaction, as there is currently no formal sale process in place. Industry observers suggest that strategic players like Max may also express interest once the situation becomes clearer. The healthcare sector is attracting significant attention from buyout funds.

Aster DM Healthcare shares witnessed a record single-day increase of 16% on Tuesday, reaching a new high in anticipation of the Gulf sale and subsequent reorganization. However, the share price has since declined by nearly 5%, closing at Rs 310.80 on Thursday. The promoter family currently holds a 41.9% stake in the company, which has a market value of approximately Rs 15,524.87 crore ($1.88 billion).

In the event of a transaction, a mandatory open offer of 26% will be made. Specific details of the deal are yet to be determined. Despite relinquishing control to maximize wealth, the Moopen family may still retain a minority portion.

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