Kohlberg Kravis Roberts and Co led consortium is planning to invest R600 Cr in Chennai-based Apollo Hospitals, ET states. The proposed deal provides an opportunity to partner with the Reddy family for the growth of the healthcare business.
It is observed that the investors which may include a sovereign wealth fund besides the private equity company, will pump money into the unlisted holding company through quasi-equity instruments.
According to the banker, the deal is described to be a structured-equity product stating that the instrument would be convertible into equity at a future date. Structured equity is generally used to bridge the valuation gap between investor and issuer of the equity and is more commonly used in start-up, venture funds but in the current environment of economic uncertainty, it has become very common even in larger transactions, mainly in the unlisted space or at the holding companies level
Apollo Hospitals is likely to use the money to part-fund its expansion plans and cut debt. The hospital chain has lined up a R2400 Cr expansion plan. The company’s expansion plans envisages setting up of 3,000 new beds over the next three financial years to enhance its network from a current capacity of 6,000 beds to 9,000 in 51 hospitals for FY15.
The total debt requirement for expansion is over R2000 Cr, which the company would be raising in phases over the next three years.
Founded by Prathap .C. Reddy, Apollo Hospitals is one of the largest hospital networks in Asia with 8,420 beds across 51 hospitals, 1,503 pharmacies, 92 primary care and diagnostic clinics and 100 telemedicine units across 10 countries.
It called off its JV with the Yash Birla group to develop a project in Thane, which it had entered into a partnership with the group in 2007 to develop two hospitals - one at Thane and the other at Nashik.
In another move, Apollo Hospital said it will invest Rs.100 crore in its Lifeline Multi Speciality Hospital acquisition and rebrand it Apollo.
KKR has raised $100 Mn from Texas Teachers Fund last month to provide growth capital to Indian companies.
In May, the fund purchased a majority control in a specialised tyre maker, Alliance Tire, for $500 Mn. The company has factories in India and Israel. KKR had earlier provided so-called structured debt to Sajjan Jindal group and Chennai-based Sanmar group through its NBFC operations.
Recently, Apax Partners sold around 13 lakh shares of Apollo Hospitals for around R128 Cr through bulk deal on NSE.
Swiss Finance Corporation has acquired 55.3 lac shares of Apollo Tyres for a total of R35.877 Cr through open market transaction hiking its stake by 1.097% to 2.49%. The company purchased 2973038 shares from NSE at R64.79 and the remaining 2,556,962 shares from BSE at R64.98 apiece.
Making its mark in India by its first investment in Dovetail way back in 1994, it has been one of the mostactive VCs in the past 7 years after merging with Mitra's earlier fund Erasmic Venture in 2008. The firm went on to raise about $60 Million that year.