Aster DM plans dividend payout from Gulf unit sale

Wam

India’s Aster DM Healthcare intends to distribute between 70 percent and 80 percent of the $903 million proceeds it will receive from selling its Gulf business.

The company agreed in November 2023 to sell a majority stake in its Gulf business to Alpha GCC Holdings for $1 billion as part of a plan to separate the unit from its Indian operations.

It will receive $903 million on deal closing and the rest on meeting the specified conditions.

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“As a matter of corporate laws in India, the dividend can be finalised and declared only after transaction proceeds are received by the company at the completion of the transaction,” the company said in a statement published on the Bombay Stock Exchange.

The proposed dividend declaration is subject to transaction completion, including shareholders and regulatory approvals.

The sale of the GCC business concluded after a year-long bidding process involving more than 40 interested parties and multiple competing offers, the company said. 

The sale process was overseen by two investment banks and the board, which helped in optimum value discovery.

However, Financial Express, an Indian financial daily, reported that Empowerment Services, a corporate governance research and proxy advisory firm, has approved Aster DM’s plans to divest its Gulf business, indicating “no major concerns”.

The transaction, announced last November, values the GCC business at an enterprise value of $1.7 billion and an equity value of $1.001 billion. The deal will assist in erasing the Gulf company’s debt.

The sale is anticipated to be completed in the fourth quarter of 2024.

The Gulf business generates 70 percent of Aster’s revenues, but it was a drag on the Indian business because of lower margins, Aster founder Azad Moopen told Mint earlier.

The profitability of the Gulf business was lower because the GCC region is “hyper-competitive” for a smaller population, while the India market is still underserved, he added.

The compounded annual growth rate for the past five years for Aster DM’s business in the GCC was 5.19 percent, while it was 16.2 percent for India.

Moopen will continue as founder and chairman, leading both the Indian and GCC businesses. His daughter Alisha Moopen will be promoted to managing director and Group CEO of the GCC business from deputy managing director.

Aster DM operates 32 hospitals, 127 clinics and 521 pharmacies in India and the UAE.

The company is seeking to expand in Saudi Arabia with plans to open 180-200 pharmacies in the next four years.