Proceeds from the transactions will be used to reduce promoter debt
On Wednesday, HDFC, India’s largest mortgage financier, said it would buy Apollo Hospitals’ 50.8% stake in Apollo Munich Health Insurance for ₹1,336 crore
Apollo Hospitals Group is looking to sell its stake in two more subsidiaries to raise up to $200 million, two people directly aware of the matter said on Thursday, a day after it agreed to sell its stake in a health insurance joint venture to HDFC Ltd.
Apollo group currently runs more than a dozen brands in healthcare, including clinics, pharmacies, hospitals and health insurance.
The people cited above, who have direct knowledge of ongoing talks and requested anonymity, said the group is in discussions to sell stakes in Apollo Health And Lifestyle Ltd (AHLL) and Apollo Proton Therapy Cancer Centre Pvt. Ltd. Proceeds from the transactions will be used to reduce promoter debt.
As on 31 March, 78.13% of promoter shareholding in the group’s flagship listed company Apollo Hospitals was pledged, compared with 74.81% as on 31 December, according to Capitaline data. Apollo Hospitals had a consolidated debt of ₹3,450.29 crore as on 31 March 2019.
“Among potential buyers there are several large private equity funds, which have shown initial interest," said the first person cited earlier.
An email sent to Apollo Hospitals did not elicit a response.
Apollo Health and Lifestyle is in the business of providing primary healthcare facilities through a network of owned/franchised clinics across India offering specialist consultations, diagnostics, preventive health checks, telemedicine facilities and a 24-hour pharmacy. For the year ended 31 March 2018, it posted a revenue of ₹471 crore and a net loss of ₹165 crore, widening from a loss of ₹141 crore on revenue of ₹388 crore, according to its annual report.
In January this year, Apollo opened the Proton Cancer Therapy Centre, considered South Asia’s first such facility. The 150-bed centre has three proton therapy rooms, an advanced radiation oncology centre, medical oncology and immunotherapy facilities and high-end day care chemotherapy wards.
On Wednesday, HDFC, India’s largest mortgage financier, said it would buy Apollo Hospitals’ 50.8% stake in Apollo Munich Health Insurance for ₹1,336 crore. Besides the money from HDFC, Apollo group will also receive ₹294 crore from its German joint venture partner Munich Re, taking its total payout to ₹1,630 crore.
The health insurance deal will help lower debt at Apollo group.
“The transaction will improve our cash flows, which we will use to invest in creating new infrastructure as well as for existing infrastructure. It will also help us deleverage our balance sheet," Suneeta Reddy, managing director of Apollo Hospitals, said on Wednesday.
On Thursday, shares of Apollo Hospitals rose 1.5% to ₹1,372.95 apiece on the BSE. In comparison, the benchmark Sensex rose 1.25%.
Even as Apollo looks to trim debt, the hospital chain industry is witnessing other big deals and investments. Mint reported on 12 June that buyout firm TPG Capital and Manipal Hospitals are set to close the acquisition of Dr Naresh Trehan’s Medanta chain of hospitals soon, in one of the largest acquisitions in India’s healthcare industry.
KKR and Co.-backed hospital chain Radiant Life Care Pvt. Ltd is also on an expansion drive, with its acquisition of Max Healthcare Institute Ltd last year, which will make the combined entity India’s third-largest hospital chain by revenue. The merged entity will own more than 3,200 beds in 16 hospitals across India.
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