Listed hospital chain Aster DM Healthcare Ltd is planning to raise fresh capital from select investors, as it moves to acquire the remaining ownership in its wholly-owned subsidiary, Aster Aadhar Hospital (Prerana Hospital Ltd), in Maharashtra.
The healthcare conglomerate has signed an agreement to acquire the remaining 13% stake in Aster Aadhar Hospital. This acquisition will bring Aster DM Healthcare's ownership to 100%, from the current 87%, the company announced in a press note on Wednesday.
The transaction will be completed in two tranches, with an indicative completion timeline of 31 December, 2025, according to a note from the hospital group. The acquisition cost “will be determined based on an independent valuation report, in accordance with applicable laws,” the note added.
The move comes as Aster DM Healthcare seeks board approval to issue additional equity shares via preferential allotment, allowing specific investors to purchase up to 5% of the company’s total equity post-issuance, as per a regulatory filing on Tuesday.
According to Aster's current share price, the value of the 5% would be up to Rs 1,195 crore (about $140 million).
To be sure, Aster DM first bought select stake in Aster Aadhar in 2008. Its stake subsequently went up to 87% after stake purchase in multiple tranches.
Aster Aadhar Hospital, a 254-bed multi-specialty hospital in Maharashtra’s Kolhapur region, aligns with the company’s strategy to consolidate operations in Western India, said Azad Moopen, founder and chairman of Aster DM Healthcare.
The acquisition follows after VCCircle exclusively reported that Aster DM Healthcare is in advanced talks with private equity giant Blackstone for an all-stock merger between Care Hospitals and Aster DM’s India business. The proposed merger, if finalized, will be jointly controlled by the Moopen family, Blackstone, and TPG Capital.
If completed, the merger will create the second-largest publicly listed hospital chain in India, trailing only Apollo Hospitals. Aster DM’s India business includes 19 hospitals with more than 4,800 beds, while Care Hospitals and KIMS Health together operate 21 hospitals with over 4,000 beds.
Aster DM Healthcare reported a 24% increase in consolidated revenue to Rs 3,699 crore for the fiscal year ending March 2024, compared to Rs 2,983 crore the previous year. Operating EBITDA rose by 30% to Rs 620 crore during the same period, according to company filings.
Looking ahead, Aster DM’s India business is expected to achieve a CAGR of 18%-20% between FY25 and FY29, driven by higher occupancy and capacity expansion. EBITDA margin is projected to reach 23%-25% over the next 4-5 years, the company said.
Aster DM Healthcare operates across the primary, secondary, tertiary, and quaternary care spectrum through 19 hospitals with 4,994 beds, 13 clinics, 212 pharmacies, and 232 labs and patient experience centers in five Indian states.