US-based private equity firm Advent International has agreed to invest Rs 2,475 crore ($296 million) to pick up a minority stake in Apollo HealthCo Ltd, a subsidiary of Apollo Hospitals Enterprise Ltd.
The transaction would enable the merger of two units under Apollo Healthco—wholesale pharma distribution vertical Keimed Pvt Ltd and digital healthcare business Apollo 24/7.
Advent will invest via compulsory convertible instruments in two tranches to buy a 12.1% stake in the merged entity, valuing the combined entity at an enterprise value of Rs 22,481 crore. The enterprise value of Apollo 24/7 is Rs 14,478 crore and Keimed’s enterprise value is Rs 8,003 crore.
The PE firm will invest Rs 1,732 crore in the first stage and Rs 743 crore in the second phase.
After the merger, Keimed’s shareholders will hold a maximum of 25.7% stake in the combined entity. Apollo Hospitals will remain the largest controlling shareholder with at least a 59.2% stake.
Mid-market investment bank Veda Corporate Advisors advised Apollo HealthCo on the transaction.
“At Apollo, we believe in putting the consumer at the heart of everything we do. With this belief, we have incubated and grown Apollo HealthCo, and are pleased that a marquee investor like Advent has recognised its inherent value and potential," said Suneeta Reddy, MD at Apollo Hospitals.
The hospital chain operator said that it expects the combined entity will deliver Rs 25,000 crore of revenue in three years with 7-8% EBITDA.
"This investment demonstrates Advent’s commitment to investing in the fast-growing healthcare sector in India, backing high-quality market leading players and working creatively with promoter-founders to drive value creation for all stakeholders," said Shweta Jalan, managing partner and head of Advent India.
Advent’s other Indian healthcare bets include investments in pharmaceutical companies Cohance Lifesciences Ltd and Suven Pharmaceuticals Ltd. Last month, Advent announced merger of both the firms. Biopharmaceutical firm Bharat Serums is another major investment struck by Advent on Indian soil.
Apollo Healthco claims that its backend distribution service caters to over 6,000 pharmacies across 1,100 cities in 27 states. Apollo 24/7, a digital health platform, offers a wide array of healthcare services such as doctor consultations, medicine home deliveries, diagnostics at home, chronic condition management and insurance offerings. Since its inception in February 2020, Apollo 24/7 has built a user base of more than 33 million.