Open to evaluating inorganic opportunities pan-India, says Blackstone's Ganesh Mani post Aster DM merger

Ganesh Mani, Senior Managing Director, Blackstone India

The world's largest private equity player Blackstone has struck India's biggest healthcare deal by sealing a merger of its portfolio firm Quality Care India Ltd with Moopen family-founded Aster DM Healthcare, creating a combined entity valued at around $5 billion.

At 30.7 percent stake, Blackstone will be the largest shareholder in the combined entity Aster DM Quality Care Limited, which will have a network of 38 hospitals and 10,150 beds spread across 27 cities, making it one of the top 3 hospital chains in India. Aster DM Quality Care will be jointly controlled by the PE player and Aster promoters who will own 24 percent stake.

Moneycontrol caught up for an exclusive chat with Ganesh Mani, senior managing director , Blackstone India on the big-bang Aster DM transaction and the former's sizzling M&A play in the healthcare space in the last one year.

Mani says the investment giant will be open to evaluating inorganic opportunities pan-India and plans to cross 13,000 beds in a little more than two years. He adds Blackstone is committed to becoming a leading player in the Indian healthcare market. Edited Excerpts:

Blackstone announced the Care Hospitals and KIMSHealth hospitals acquisitions in October 2023 and now it has struck a third deal by merging Quality Care India with Aster DM Healthcare. The resulting merged listed entity, called Aster DM Quality Care Limited, will create one of India’s top 3 hospital chains in terms of revenue and bed capacity. In such a short span, you have become a formidable player in the segment. What were the driving factors behind this M&A blitzkrieg in little more than a year?

Life sciences and healthcare are key investment themes for Blackstone. We have been investing in the sector with a buy-and-build thesis over the past year. We take pride that we have come from nowhere to create the second largest hospital platform in India in less than two years through our business builder approach.

We are committed to being a long-term investor and business builder in India. We will continue to use our scale, operational expertise, and global life sciences insights to help grow the platform.

Currently, as per the deal announcement, Blackstone and the Aster promoters will jointly control the merged entity. But going ahead, if the Moopen family seeks to exit, will Blackstone be open to acquire additional stake and become the sole promoter? Is there a provision for that in the deal terms?

Blackstone will be the single largest shareholder in the combined entity post merger. Our focus is on investing in and building the business at Aster DM Quality Care and delivering exceptional patient care. We look forward to partnering with the Aster Promoters in the next stage of the company's growth.

Is Blackstone targeting the number one spot in India in terms of revenue and bed capacity and if yes is there a timeline that you have in mind?

We have an organic bed addition plan for the combined entity that takes us to over 13,000 beds in a little more than two years. We will also evaluate inorganic opportunities as they arise. We are committed to becoming a leading player in the Indian healthcare market and also to be a leader in medical ethics, patient experience, and quality of care.

Will the newly merged entity Aster DM Quality Care Limited opt for the M&A route going ahead to expand presence in the north and western market, including Mumbai?

We will be open to evaluating inorganic opportunities pan-India. We will want to have a sizable presence or micro-market leadership in a given market.

What was the merger rationale for another foray in the crowded South market which already has leading players with scale like Apollo Hospitals and Manipal Hospitals?

There is a large demand-supply gap for quality healthcare across cities in the South market. Our goal is to provide quality healthcare services to a broad population and make a positive impact on the lives of people across the country. The South India healthcare market continues to show strong growth potential due to increasing incomes, rising awareness and diagnosis of non communicable diseases (e.g., cancer). Our merger with Aster allows us to tap into this.

It also importantly provides scale, further diversification, is growth accretive, and offers multiple synergies which we will execute on post merger.

The merged entity also includes lucrative assets in Bangladesh. What impact do you foresee on the revenues from these assets due to the current political and economic stability?

Firstly, we are thankful to the clinical teams and employees in Bangladesh for continuing to provide their services to the people of Bangladesh at this juncture without any disruption. Financially, we have not seen an impact on the Bangladesh assets despite the situation you mention. Also, during this period, some of the usual medical tourism outflow did not flow out of the country and instead chose to visit our units.

Stepping back, the Bangladesh healthcare market is even more underpenetrated for quality healthcare than India. We believe we have the best unit in the country in Evercare Dhaka which is JCI accredited six times and provides high quality care. The long term healthcare macro and the specific micro is very favorable.

How would you respond to some sections of the healthcare industry who fear that with increased PE buyouts of healthcare assets, overall healthcare costs for patients in India may go up eventually?

We plan to add bed capacity to go up to more than 13,000 beds in less then three years which will serve more of the wider patient population while providing growth for the company. Scale also provides cost synergies, for example in procurement and supply chain, to the now larger company. We are also making investments in technology as you mentioned. Through these, we will improve operational efficiencies and effectively manage costs for us and the patients. As you mentioned, we are also looking to bring our global expertise and insights to ensure best-in-class patient outcomes and quality of care in India.