The race hots up for Aster DM's India business | Mint

The race hots up for Aster DM's India business

Azad Moopen, founder and chairman, Aster DM Healthcare.
Azad Moopen, founder and chairman, Aster DM Healthcare.

Summary

  • Aster DM Healthcare sold its gulf business last month to Fajr Capital and the Moopens, the founding family of Aster DM.

MUMBAI : Private equity (PE) firm KKR & Co., Canadian pension fund Ontario Teachers’ Pension Plan (OTPP) and Blackstone-backed Care Hospitals have submitted non-binding term sheets to acquire a stake in the Indian business of Aster DM Healthcare Ltd, two people aware of the matter said. One of the two people said Hong Kong-based investment firm BPEA EQT has also presented a term sheet.

Mint had reported on 28 November that Aster DM Healthcare sold its gulf business to Fajr Capital and the Moopens, the founding family of Aster DM.

KKR, which is believed to be in advanced talks with Aster DM for the India deal, may initially acquire 20-25% stake, but may purchase more later, the people said. The suitors have presented different deal models to pursue the transaction.

A third person aware of the transaction said on the condition of anonymity that the Moopens prefer to close the sale of the GCC (Gulf Cooperation Council) unit before pursuing a stake sale in the Indian operations. The sale of the Gulf business is expected to close by March 2024.

When contacted, Azad Moopen, founder & chairman, Aster DM Healthcare, said: “As part of our business plans, we regularly explore opportunities, including onboarding like-minded investors who can add value to our business and stakeholders. The company is now in the process of completing the disinvestment of its GCC business to a consortium with promoter family leadership."

Moopen added that the promoters plan to retain control and leadership in both India and the GCC after the restructuring.

KKR has offered to acquire stake in the Indian entity from investors such as Olympus Capital and by accumulating stake from the secondary markets, the two people mentioned above said on the condition of anonymity.

Olympus owns 19% stake in the India entity and will sell its shares in the transaction.

Care Hospitals, which is backed by global PE firms Blackstone Group and TPG Rise, has also offered a term sheet to acquire a majority stake, but in a partnership model, the people said.

This deal construct has offered a merger option since the Moopen family, which owns 42% stake in the Indian entity, wants to retain control of Aster DM and so is not keen to exit the business, they said.

Care Hospitals’ offer is on the lines of the deal it made to acquire Kerala-based Kims Health on 30 October. Care now owns a majority stake in Kims, while founder Dr M.I. Sahadulla retains a minority stake and continues to run the hospital chain.

Canadian pension fund OTPP has also offered a deal like Care’s, which entails eventually merging Aster DM with Sahyadri Hospitals, one of the people cited above added. OTPP acquired Sahyadri Hospitals in August 2022.

Aster had sold its GCC business in a bid to unlock shareholder value. The company’s shares have gained from 332.65 on the day of the announcement (28 November) to close at 400.2 on Monday.

Moopen said on 28 November that the company has received greater interest from PE funds after its decision to separate the two units. “We have now become a sought-after bride in the Indian ecosystem," he said, referring to Aster’s India unit, which reports higher margins than the Gulf unit, albeit the latter reports nearly 70% of the group’s revenues.

Any deal on the India unit will take months to fructify, the people said.

Blackstone, Care Hospitals and Olympus Capital declined to comment. KKR, OTPP and BPEA EQT did not respond to a request for comment.

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