Hospital Chain Aster DM Set to Close its $1Bn Gulf Business Sale

Last year, Aster agreed to sell a majority stake in its Gulf business to a consortium led by private equity firm Fajr Capital for $1 billion.

Aster DM Healthcare has set its foot in the final stage of completing the separation of its Indian and Gulf businesses, alongside the proposed investment in its GCC business by an investor group.

In November last year, the hospital chain agreed to sell a majority stake in its Gulf business to a consortium led by private equity firm Fajr Capital for $1 billion.

The decision comes after a series of negotiations and assessments, culminating in the finalization of the deal.

The hospital group’s management has been tight-lipped about the specifics, but sources indicate that the transaction is set to be completed within the next few weeks.

The sale marks a strategic move for Aster DM, which has been a prominent player in the healthcare sector across the Gulf countries.

With this divestment, the company aims to streamline its operations and focus on other growth opportunities. Industry experts are closely monitoring the situation, anticipating potential ripple effects in the regional healthcare landscape.

Revisiting the Major Deal

In November, Aster DM Healthcare Ltd 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.

The move was directed at unlocking shareholder value and appealing to a broader base of institutional investors.

In this initiative, a UAE government-backed Fajr Capital consortium was slated to acquire 65% of the Gulf entity. At the same time, Azad Moopen, the promoter of Aster, was about to retain ownership of the remaining 35% once the transaction concluded.

Talking on the matter, Dr Azad Moopen, founder, Aster DM Healthcare, said, "The India market was not giving the value for the GCC business. Our investors told us that these two geographies have got their own destiny. We also realised that these two markets are different, we have to have a separate set of investors as well as a separate set of strategies and management teams for both strategies."

Fajr Capital, the lead member of the consortium, contributed the bulk of the funds for the deal. The Moopen family funded its share of the transaction through dividends secured from the listed India business.

The promoters' 42% stake in the listed entity was pledged against a debt of $80 million, which was expected to be retired following the transaction.

Aster’s Expansion Plans

The closing of the deal comes amid the hospital organization’s expansion plans. Recently Aster DM Healthcare, outlined expansion plans, intending to add 1,500 beds over the next 2 to 3 years.

Reportedly, the allocated capital is around INR 850-900 Cr for this initiative. The expansion aims to enhance healthcare accessibility and cater to the growing demand for quality medical services.

Sharing thoughts, Dr Nitish Shetty, CEO, Aster DM Healthcare, said, “The expansion is part of the company's commitment to meeting the growing healthcare demands and an objective to become one of the top three players in the country. We intend to add to increase its capacity by adding 1500 beds over the next three years.”

The proposed expansion, according to him, is set to boost Aster DM Healthcare's bed capacity in India, reaching over 6,000 beds.

This encompasses the upcoming Aster Capital project in Thiruvananthapuram, slated to inaugurate with over 350 beds in the initial phase by FY26, alongside Aster MIMS Kasargod, which aims to incorporate approximately 200 beds into its facilities.

The expansion plan also involves increasing capacity in existing hospitals. Medcity and MIMS Kannur will each receive an additional 100 beds, while Aster Whitefield is set to expand with an additional 159 beds.

Additionally, Aster DM Healthcare is evaluating prospects in new markets such as Maharashtra, Tamil Nadu, and Uttar Pradesh.