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Aster DM Healthcare to separate India, Gulf businesses

New Delhi: Aster DM Healthcare on Tuesday said it will separate its India and Gulf businesses by way of a deal worth over USD 1 billion.

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The company said it has received approval from its board and subsidiary Affinity Holdings Pvt Ltd to separate the India and GCC businesses into two distinct and standalone entities.

Under the separation plan, Affinity has entered into a definitive agreement with a consortium of investors led by Fajr Capital, a private equity firm headquartered in the UAE, to invest in Aster’s GCC business.

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As per the deal, a consortium led by Fajr Capital will acquire a 65 per cent stake in the ownership of the GCC business, Aster DM Healthcare FZC, Aster DM Healthcare said in a statement.

The Moopen family will continue to manage and operate the GCC business retaining a 35 per cent stake, on and from closing, it added.

The current market cap of the combined India and GCC business stands at USD 2 billion, it said.

The transaction values the GCC business at an enterprise value of USD 1.7 billion (Rs 13,540 crore), it added.

In a regulatory filing, Aster DM Healthcare noted that definitive agreements have been inked for the proposed transaction for a consideration of USD 1.01 billion.

Upon completion, the separation of the India and GCC businesses will establish two distinct regional healthcare entities that will benefit from the strategic and financial flexibility to focus on growing market demand and the priorities of patients, the company said.

Both the India and GCC entities will be operated by separate dedicated management teams and will also benefit from a dedicated investor base that will aid future growth in the Indian and GCC markets respectively, both of which hold significant growth potential, it added.

“The company plans to ramp up bed capacity in India by almost one-third, by adding more than 1,500 beds by FY27. In the GCC, Aster DM Healthcare FZC will bolster its expansion plans in key markets, such as the UAE and Saudi Arabia, while enabling greater access to quality and comprehensive healthcare across physical and digital channels,” Aster DM Healthcare stated.

Post completion, Azad Moopen will continue as the founder & chairman of Aster overseeing both India and GCC entities.

His daughter Alisha Moopen will be promoted to Managing Director and Group CEO of the GCC business to lead a long-term strategy that will unlock value as a pure-play GCC operating company. The Indian entity will continue to be led by Nitish Shetty as Chief Executive Officer, who will focus on the growth of the India business, aimed at creating value for its shareholders.

“The strategic decision to segregate the India and GCC operations was based on the rationale to establish fair value for both entities, creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets,” Aster DM Healthcare Founder and Chairman Azad Moopen said.

He further said: “In India, we as promoters, remain committed to our growth plans and hence had increased our stake to 42 per cent earlier this year. Major institutional shareholders continue to remain invested, reflecting overall confidence in the company’s India business model and go-to-market strategy spanning all segments of the healthcare space.”.

The company expects the transaction to close by March 2024.

In India, Aster has a substantial and growing network in five South Indian states through its 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres.

In the Gulf, Aster has 15 hospitals, 118 clinics and 276 pharmacies across the UAE, Saudi Arabia, Qatar, Oman, Bahrain and Jordan.

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