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Aster DM to sell majority stake in Gulf business for $1bn

Aster expects the sale of its GCC business to be completed in the fourth quarter of 2024 Wam
Aster DM's proposed dividend declaration is subject to transaction completion, including shareholders and regulatory approvals in India

UAE-based hospital chain Aster DM Healthcare will sell a majority stake in its Gulf business to a regional consortium for $1 billion as part of a plan to separate the unit from its Indian operations.

A consortium led by state-backed Fajr Capital will own 65 percent of the Gulf business, while Azad Moopen, the founder of Aster, will own 35 percent, the company said in a disclosure filing on the Bombay Stock Exchange.

Other consortium members are sovereign wealth fund Emirates Investment Authority, Al Dhow Holding Company, Wafra International Investment Company and the Saudi Arabian billionaire Olayan family’s Hana Investment.

Aster’s GCC business is clubbed under Alpha GCC Holdings Limited, a wholly owned subsidiary of Aster DM Healthcare.

The current market cap of the combined India and GCC business stands at $2 billion, Mint, an Indian financial daily, reported.

The transaction 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, founder Azad Moopen told Mint.

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 currently 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.

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