Blackstone and TPG-owned Care Hospitals is in advanced talks for a so-called reverse merger with Dr Azad Moopen's Aster DM Healthcare Ltd, a transaction that will result in the private equity firm-owned hospital chain getting listed on exchanges, people aware of the development said.
Care is in advanced stages of completing due diligence of Aster DM. Work on documentation for a shareholders’ agreement is expected to begin soon, the people said, requesting anonymity.
The Care Hospitals platform includes assets in India and Bangladesh run by Care and the Kerala Institute of Medical Sciences (KIMS Health), which were acquired by private equity firm Blackstone in October 2023.
Blackstone acquired a 73 percent stake in Care Hospitals for a valuation of Rs 6,600 crore, with TPG owning the remaining stake.
In a separate deal, Care Hospitals acquired around 80 percent stake in KIMS Health at a valuation of Rs 3,300-3,400 crore. KIMS Health founder Dr MI Sahadulla holds the remaining stake.
Dr Moopen will continue on the board of the company as its chairman, the people said. Other management posts, such as those of the chief executive officer and chief financial officer of the merged entity, will be filled by executives selected by Blackstone and other Care shareholders as well as the Moopen family.
They said the two parties will be in joint control of the company and also have special rights over important strategic and operational issues.
The reverse merger with Aster DM will also provide the shareholders of Care Hospitals a potential exit route. The share swap ratio for the merger is yet to be finalised, the sources said.
Mint first reported the merger talks between Aster and Care on August 5.
Azad Moopen and family hold a 41.88 percent stake in Aster DM. The promoter family’s holding will fall following the merger, though it will continue to hold a significant stake.
As of September 17, Aster DM’s market capitalisation stood at Rs 20,649 crore.
A spokesperson for Blackstone declined to comment. "We do not comment on market speculations," said a spokesperson for Aster DM Healthcare.
India's top 3 hospital chains
The merger of Aster DM with Care Hospitals will put the merged entity among the top three hospital chains in India in terms of the number of beds. Apollo Hospitals and Manipal Hospitals are the other two major chains in the country.
Aster DM Healthcare operates 19 hospitals with 4,869 beds, 13 clinics, 217 pharmacies, and 243 labs across five states.
Care Hospitals has approximately 5,000 beds, with Care operating over 3,000 beds at 17 facilities across seven cities in India, including Hyderabad, Nagpur, Indore and Bhubaneswar. KIMS Health operates a 2,000-bed portfolio.
Apollo Hospitals is the biggest healthcare chain in the country with over 10,000 beds, while Manipal has around 9,500 beds.
Aster restructuring
In April, Aster DM announced it had concluded the separation of its India and GCC businesses.
Under the separation plan, a consortium of investors led by Fajr Capital, a sovereign-backed private equity firm, acquired a 65 percent stake in Aster GCC.
The Moopen family has retained a 35 percent stake in the GCC business alongside management and operational rights.
Affinity Holdings Limited, a wholly subsidiary of Aster DM, received a cash consideration of $907.6 million from the sale of its stake in the GCC business.
On April 15, the Aster DM board announced a special dividend of Rs 118 a share, distributing around 80 percent of the proceeds of the GCC business sale as dividends to shareholders.
At 1.09 pm, the Aster DM stock was trading at Rs 409.35 on the National Stock Exchange, down a percent from the previous close.
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