Aster DM to Tap Private Equity Investors for its India Biz

Reportedly, the business has been getting inbound interest from investors for the last six months; which saw a significant rise after the recent sale announcement of its Gulf business.

Aster DM Healthcare, a Dubai-based hospital chain, has planned to seek private equity investment for its Indian operations after completing the sale of its business in the Gulf Cooperation Council (GCC) countries.

Reportedly, the business has been getting inbound interest from investors for the last six months; which saw a significant rise after the recent sale announcement of its Gulf business.

As nothing has been finalised so far, the company is currently looking for investors and will begin actively working on it after finishing the business sale in the GCC countries.

Moreover, Aster has proposed to use most of the proceeds from the GCC business sale to pay dividends to shareholders, and the rest shall be utilised for the business expansion.

Sharing his views, Dr Azad Moopen, chairman, Aster DM Healthcare, said "We have a plan for India; whatever is required for the next three years will be funded from the sale and internal accruals. This transaction helps India in such a way that the debt which was sitting on the consolidated balance sheet, a large part of it goes away because this was GCC (debt); India debt is very minimal. It is as low as one year's Ebitda. We don't have issues from banks for funding (expansion)’’

Days back, Aster DM Healthcare also unveiled plans to separate its Gulf business and sell it to its Indian promoters, the Moopen family, and a Dubai consortium for $1.001 billion. This transaction is expected to be completed by the end of this financial year.

The Gulf business constitutes 70% of Aster's revenues and will be housed under Alpha GCC Holdings Ltd, a wholly-owned material subsidiary of Aster DM Healthcare.

Of the total amount, $903 million will be paid to Aster DM Healthcare. Most of the proceeds will be issued as dividends to Aster DM Healthcare investors, subject to board approval. The remaining funds will be paid out after certain contingent events, including an earnout of up to $70 million based on the EBITDA achieved by the GCC business in FY24.

Founded in 1987 from a single clinic in Dubai, Aster DM Healthcare is a publicly traded multinational healthcare company. It provides an array of healthcare services, including hospitals, clinics, pharmacies, and healthcare consultancy services.

In India, Aster has a substantial and growing network across five states in South India through 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres. In FY23, Aster posted revenue of INR 11,933 Cr, of which India accounted for 25%. The Indian business is growing at 15-20% annually.