Advent International to invest ₹2,475 crore in Apollo Hospitals arm

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Private equity firm Advent International has revealed its plans to inject ₹2,475 crore into Apollo Hospitals’ subsidiary, Apollo HealthCo. This investment, amounting to nearly $297 million, marks a strategic manoeuvre by Advent, enabling a merger between Apollo HealthCo’s online pharmacy arm, Apollo 24/7, and pharmaceutical distributor Keimed.

The announcement, made on Friday, April 26, outlines Advent’s investment strategy, structured in two tranches of compulsory convertible instruments. These investments aim to secure Advent a 12.1% ownership stake in the merged entity, placing its valuation at an enterprise value of ₹22,481 crore.

Breaking down the valuation further, Apollo HealthCo commands a valuation of ₹4,478 crore, while Keimed holds a value of ₹8,003 crore, according to statements from the hospital chain operator.

Projections for the merged entity paint a promising picture, with an anticipated revenue surge expected to reach ₹25,000 crore over the next three years, as disclosed by Suneeta Reddy, Managing Director of Apollo Hospitals.

Under the newly-formed alliance, Apollo Hospitals is poised to maintain the majority of control, with a commanding 59.2% stake in the merged entity. Meanwhile, Keimed will secure a significant 25.7% ownership interest.

This investment reflects a broader trend of increasing private equity interest in India’s healthcare sector. Private equity firms are increasingly recognising the immense potential within the Indian healthcare landscape, as evidenced by a record-breaking surge of over $4 billion in investments in 2023.

In the tide of healthcare investments, private equity players like Temasek and Blackstone have emerged as titans, reshaping the sector’s landscape.

Temasek’s landmark acquisition of a 41% stake in Bengaluru’s Manipal Hospitals for a staggering $2 billion highlights the scale of transformation underway.

Meanwhile, Blackstone’s foray into the Indian healthcare domain with a $1 billion investment in CARE Hospitals further cements the sector’s allure for global investors.

The table below highlights key PE investments in Indian healthcare:

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow