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PEs buy 5% more in Aster Health for Rs 400cr

The Times of India:  May, 2014

Mumbai/Bangalore: Mid-market private equity funds Olympus Capital and India Value Fund (IVF) are collectively raising their holdings in India's third largest healthcare services company Aster DM Healthcare, pumping in Rs 400 crore ahead of its proposed initial public offering (IPO) in the next one year.

The latest investment values the Kochi-headquartered Aster at Rs 7,600 crore ($1.3 billion), almost 60% higher than the current market value of Fortis Healthcare controlled by billionaire brothers Malvinder and Shivinder Singh.

On Monday, the market leader Apollo Hospital Enterprises ended with a market capitalization of Rs 13,246 crore ($2.15 billion), and Fortis, the second largest domestic hospital chain, closed at Rs 4,553 crore ($755 million).

The deal will see Olympus and IVF increase their stakes in Aster to 42% from the current 37%. Aster garners most of its revenue from the Middle East, but is expanding its footprint in India and South east Asian markets.

"We will be using the funds for organic expansion to take care of the industry lead growth in India and the Middle East markets," Aster DM Healthcare's chairman & MD,'s Dr Azad Moopen told TOI. He said the Rs 3,000 crore strong revenue company would finalize investment bankers for the IPO within a month and proceed with regulatory filings thereafter.

"We are mostly likely to go for listing on Indian exchanges to raise $200-250 million. We have been debating between a London and Mumbai listing though a final decision is still pending," he said.

Dr Moopen started Aster 25 years ago in Dubai, but moved the corporate base to India to pursue growth opportunities in the sub-continent. Aster is targeting $1-billion revenue by 2017, when Indian business will account for 25%, up from 15% currently, Moopen has told this newspaper earlier.

"We believe that Aster DM is building a regional industry leading franchise and is already among the top three healthcare services companies in India by size," Olympus Capital Founding Managing Director Daniel Mintz said. "Dr Moopen and his team has grown the business ten fold since we made first investment six years ago. We are happy to continue supporting him through further investment," India Value Fund partner Sunil Theckath said.

Aster's Indian hospital network covers Pune, Kohlapur, Kochi, Calicut and other satellite towns in Kerala. It has also launched an eyecare clinic chain in the National Capital Region (NCR). Aster recently increased shareholding in Malabar Institute of Medical Sciences (MIMS) to 54%, giving it control over a chain of hospitals in Kerala. MIMS, which has 750 beds currently, is in the midst of doubling the count to 1,500 in the next two-three years.