Global PE Giant Advent International to Invest INR 2,475 Cr in Apollo Hospital Unit

As part of the agreement, Advent International will invest in compulsory convertible instruments over two tranches to secure a 12.1% stake in the merged entity.

Apollo Hospitals Group has announced a significant investment deal with private equity firm Advent International.

As per the deal, the global PE firm will invest INR 2,475 Cr in Apollo HealthCo, a unit of India’s leading corporate hospital chain operator for a 12.1% stake.

This move marks a strategic step for both parties and is poised to have a notable impact on the healthcare industry in India.

"This investment demonstrates Advent’s commitment to investing in the fast-growing healthcare sector in India, backing high-quality market-leading players," Shweta Jalan, managing partner and head of Advent India, commented.

Additionally, Apollo 24|7 has entered into a framework agreement to integrate 100% of Keimed Private Limited- a wholesale pharmaceutical distributor in a phased manner over the next 24-30 months.

This marks a pivotal moment in Apollo 24|7’s journey and will strengthen the company’s commitment to build and scale one of India’s largest integrated, omnichannel healthcare ecosystems, the healthcare provider said.

Details of Apollo-Advent Deal

As part of the agreement, Advent International will invest in compulsory convertible instruments over two tranches to secure a 12.1% stake in the merged entity.

This investment values the combined entity, including Apollo 24|7 and Keimed, at an enterprise value of INR 22,481 Cr.

After the merger, AHEL will continue to hold the largest controlling stake with at least 59.2% whereas Keimed shareholders would hold a maximum of 25.7% stake.

According to Apollo Hospitals, the merger with Keimed, a leading wholesale pharma distribution company, is expected to create a transformative business model with a Pan India presence and significant synergies.

What do Stakeholders Say?

Dr Prathap C Reddy, chairman of Apollo Hospitals Group, highlighted the strategic significance of the investment, stating, "With Advent’s investment and the merger of Keimed, the combined entity will be one of the country’s leading retail health companies."

Highlighting the potential of the merged supply chain, Shobana Kamineni, executive vice chairperson of Apollo Hospitals Enterprise noted that the size of the merged supply chain will allow 1.4 billion Indians access to genuine medicines within 24 minutes to 24 hours, seven days a week.

‘’The platform will continue to strengthen and evolve to deliver market-leading and curated omni-channel health offerings, and make high-quality care accessible to all,” she added.

Suneeta Reddy, MD, Apollo Hospitals Enterprise, on the other hand, expressed confidence in the partnership's ability to drive value creation. According to her, this deal brings together a formidable partnership of capabilities and strengths, to deliver exponential value for AHEL and its shareholders

“The combined entity will deliver Rs 25,000 Crores of revenue in 3 years with 7-8% EBITDA,’’ added the Apollo MD.

Pankaj Patwari, MD, Advent India, echoed this sentiment, expressing excitement about partnering with Apollo to build India's largest omnichannel healthtech platform.

Recent Global PE Investments in Indian Hospitals

The Indian Healthcare industry is receiving growing interest from global private equity firms driven by factors such as rising demand, favorable demographics, and the potential for consolidation and expansion.

One of the remarkable deals is by Temasek, the Singapore sovereign wealth fund which acquired a 41% stake in Bengaluru-based Manipal Hospitals for around $2 billion, making it the majority stakeholder in the hospital chain.

Similarly, global private equity firm Blackstone acquired a majority stake in Hyderabad-based CARE Hospitals for over $700 million. CARE Hospitals also acquired a majority stake in Kerala-based KIMS Health from PE player True North, creating one of India's largest hospital chains with 23 hospitals and 4,000 beds.

Asia Healthcare Holdings, backed by US private equity investor TPG and Singapore sovereign fund GIC, acquired a major stake in India's AINU for $72.1 million.