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UAE’s Aster investors seek $300m India stake sale

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Aster, based in the UAE and listed in Mumbai, began a sales process at the end of last year to demerge the Gulf business
  • Aster investors eye selling 30% stake in India business
  • Company appoints investment bank Moelis for the deal

Investors in Aster DM Healthcare are in talks to sell a 30 percent stake in the company’s India business for about $300 million, two sources with direct knowledge said, the latest potential deal in India’s booming healthcare sector.

UAE-based and Mumbai-listed Aster runs 32 hospitals, 127 clinics and 521 pharmacies in India and the UAE. The current talks are related to the India business and come just as Aster tries to demerge its Gulf business and sell a majority stake in that, Reuters reported last month.

Aster and its advisors have reached out to private equity giant KKR & Co Inc and Max Healthcare Institute – one of India’s largest hospital chains – to hold preliminary talks to take up the investors’ stake, the sources said.

Aster’s investors considering the sale are Olympus Capital, which has a 19 percent stake in the company and Mauritius-based investment firm Rimco, which holds an 12 percent stake.

Aster has appointed New York-based investment bank Moelis & Company to manage the deal, said the two sources, who declined to be named as the discussions are private.

Spokespersons for KKR and Olympus declined to comment, while Aster, Rimco, Moelis and Max did not respond to Reuters queries.

In India, private hospitals are much sought after and with federal spending on healthcare low, investors remain bullish on the sector’s growth in a country of 1.4 billion people.

In April Singapore-based Temasek spent $2 billion on a controlling stake in Manipal Health Enterprises. And last year KKR clocked its biggest exit from India by selling its stake 27 percent stake in Max Healthcare for more than $1 billion.

Indian hospital chains have raised $2 billion from private equity funds this year, compared to last year’s record funding of $3.2 billion, data from Dealogic showed.

“Compared to population healthcare is still underpenetrated in India. So as the country develops, investors see that as a big opportunity,” one of the sources said.

Separately, as discussions progress for the 30 percent stake sale in the India business, Aster will gauge if other hospital chains are interested in taking a bigger stake in the healthcare operator, though the strategy has not been finalised, the first source said.

Aster is mainly present in the southern Indian states of Kerala and Andhra Pradesh. It competes with other large hospital chains including Fortis Healthcare, Manipal Hospitals and Max, all of whom have raised funds from global investors in recent years.

“Aster is now the last remaining large hospital chain where private equity or strategic investors can come in. There aren’t many other established chains,” the first source said.

For the fiscal year ended March 31, Aster’s revenue grew 16 percent to $1.46 billion, while its net profit stood at $51.36 million.