Aster DM Healthcare separates India, GCC businesses; sells stake in Gulf biz for $1.01 bn

Aster DM Healthcare announced the separation of its India and GCC (Gulf Co-Operation Council) businesses, and the sale of the latter to Alpha GCC Holdings. According to a filing by the healthcare provider, the Gulf business has been sold for $1.01 billion.

Alpha GCC Holdings will be owned by the promoter/promoter group of Aster India and the funds will be managed by Middle East private equity firm Fajr Capital Advisors. The Fajr Capital - led consortium also includes Emirates Investment Authority, Al Dhow Holding Company (the investment arm of AlSayer Group), Hana Investment Company (a subsidiary of Olayan Financing Company) and Wafra International Investment Company, the company added.

Under the separation plan, a consortium led by Fajr Capital has entered into a definitive agreement to acquire a 65 per cent stake in the ownership of the GCC business. The Moopen family will continue to manage and operate the GCC business retaining a 35 per cent stake. Aster DM Healthcare was established by Dr Azad Moopen in 1987 as a single clinic in Dubai, UAE, and now has a large network in five South Indian states through its 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres.

“Alpha GCC Holdings Limited ("Buyer") is the buyer entity and at completion, the Buyer will be owned by the promoter/ promoter group of Aster India (“Promoters”) and funds managed by Fajr Capital Advisors Limited in the shareholding ratio of 35:65. Post the completion of the transaction contemplated under the Share Purchase Agreement, the Buyer will qualify as a member of the promoter group, since the promoters of the Company intend to acquire over 20% shareholding in the Buyer,” the company said in a filing.

Moelis & Company and Credit Suisse acted as the sell-side advisors, while AZB & Partners were the advisors to the independent directors. HSBC Bank Middle East Ltd, Allen & Overy LLP and PwC acted on behalf of the Fajr Capital consortium.

After the announcement, shares of Aster DM Healthcare jumped 14.84 per cent to hit a 52-week high of Rs 382 against their previous close of Rs 332.65. Turnover on the counter came at Rs 11.64 crore, commanding a market capitalisation (m-cap) of Rs 18,941.54 crore.

Both the GCC and India entities will be operated by different management teams, with both the entities aiming to expand their presence.

Dr Azad Moopen will remain the founder and Chairman of Aster, and will oversee both the India and GCC entities. Alisha Moopen will be promoted to Managing Director and Group CEO of the GCC business, while the India entity will be led by Dr Nitish Shetty as its CEO.

“The strategic decision to segregate the India and GCC operations was based on the rationale to establish fair value for both entities, creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets. In India, we as Promoters, remain committed to our growth plans and hence had increased our stake to 42% earlier this year. Major institutional shareholders continue to remain invested, reflecting overall confidence in the Company’s India business model and go-to-market strategy spanning all segments of the healthcare space,” said Dr Moopen.

Alisha Moopen said that the separation will allow the “GCC operations to seize a significant opportunity to unlock value through its geographic expansion, diversify revenue through targeting different economic segments”.

The separation will also offer Aster India an opportunity to expand its institutional investor base, said the company.

The current market cap of the combined India and GCC business stands at $2.0 billion. The transaction values the GCC business at an enterprise value of $1.7 billion (Rs 13,540 crore), and an equity value of $ 1.0 billion (Rs 8,215 crore).

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