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Business News/ Companies / News/  HDFC lends $100 million to Apollo promoters
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HDFC lends $100 million to Apollo promoters

The loan has been used by Apollo promoters to repay debt owed to Credit Suisse
  • The promoter group intended to repay the Credit Suisse loan through proceeds of a 50.8% stake sale in Apollo Munich Health Insurance Co. Ltd to HDFC, which would fetch the promoters ₹1,036 crore
  • With the deal yet to materialize, Apollo promoters have had to lean on HDFC once again to help them manage their debt obligations.Premium
    With the deal yet to materialize, Apollo promoters have had to lean on HDFC once again to help them manage their debt obligations.

    Mumbai: Mumbai: Mortgage lender HDFC Ltd has lent $100 million (Rs700 crore) to the promoters of India's largest hospital chain Apollo Hospitals Enterprise Ltd, to help repay immediate debt obligations of the hospital chain's promoters, regulatory filings show.

    The loan has been used by Apollo promoters to repay debt owed to Credit Suisse. Mint reported on 19 July, that the Apollo promoters had raised short term debt (maturity of three months) of Rs1,000 crore from Credit Suisse to repay debts that were coming up for maturity back then.

    The promoter group intended to repay the Credit Suisse loan through proceeds of a 50.8% stake sale in Apollo Munich Health Insurance Co Ltd, to HDFC, which will fetch the promoters Rs1,036 crore.

    However, with the Apollo Munich deal yet to materialize, the hospital chain promoters have had to lean on HDFC once again to help them manage their debt obligations.

    “An amount of 700 crore was borrowed by the Promoter Family from HDFC (on standard borrowing terms), to repay the short-term debt of Credit Suisse (which was originally intended to be repaid through the proceeds of the HDFC - Apollo Munich Health Insurance transaction). The Credit Suisse loan has now been repaid in full from the proceeds of the HDFC loan," a spokesperson for the group said in an emailed response to Mint’s queries.

    The spokesperson added that the Apollo group expects the insurance stake sale to close soon.

    “We are in the final stages of obtaining regulatory approvals for the Insurance transaction, and expect to complete all necessary steps to achieve transaction close in the next 30-45 days," the spokesperson said.

    The proceeds from the transaction will be applied to repay the loan from HDFC, they added.

    Emails sent to HDFC and Credit Suisse did not elicit a response.

    The insurance stake sale is a crucial part of the Apollo promoters plans to reduce the quantum of pledged promoter sales.

    According to Apollo Hospitals stock exchange filing, as of 13 December, around 66% of promoter shareholding in the company is pledged with lenders.

    In September, Apollo Hospitals’ managing director, Suneeta Reddy, a member of the promoter family, sold a 3.6% stake in the company as part of the efforts to trim promoter-level debt.

    Shares were sold to institutional investors, including a fund managed by Abu Dhabi Investment Authority and France’s Societe General, for 1,482.50 per share, fetching the promoters 741 crore.

    Reddy highlighted that the promoters plan to bring down their pledged shares to 20% of total promoter shareholding. The promoter family currently holds a 30.8% stake in the company.

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    ABOUT THE AUTHOR
    Swaraj Singh Dhanjal
    " Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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    Published: 16 Dec 2019, 10:41 PM IST
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