Aster’s India and GCC business separation nearing completion

Aster DM Healthcare Limited, one of the largest and fastest growing integrated healthcare providers in GCC and India, on Wednesday announced that the separation of its India and GCC businesses and the proposed investment in the company’s GCC business by a consortium of investors led by Fajr Capital, a sovereign-owned private equity firm headquartered in the UAE, is nearing imminent completion.

In November 2023, corporate approvals were received to separate the Company’s India and GCC businesses into two distinct and standalone entities to unlock long-term value. Under the separation plan, a Fajr Capital-led consortium entered into a definitive agreement to acquire a 65 per cent stake in the company’s GCC business. The plan was approved by the company’s shareholders in January 2024.

As a part of the completion process, the Fajr Capital-led consortium has obtained the necessary approvals from Saudi Arabia’s General Authority for Competition (GAC). All conditions precedent outlined in the SPA are now complete. No-objection certificates as required from key partners and have been received and local and regulatory authorities in GCC have been informed as necessary about the separation of the businesses and the imminent completion of the Transaction. The integration of business operations in Qatar into the transaction perimeter of Aster DM Healthcare FZC has also been successfully completed.

The Moopen family will continue to lead and operate the GCC business retaining a 35 per cent stake in the buyer entity. Existing shareholders will continue to remain with the listed Indian entity, Aster DM Healthcare Ltd. Upon successful completion of the transaction, the company intends to declare a substantial portion of the proceeds as dividends to its shareholders, subject to approvals required under law.

In India, the promoters plan to continue to hold their existing stake in the company and the separation would provide an opportunity for the company to expand its institutional investor base. The company plans to add 1,500 beds by FY27 and aims to be among the top three hospital chains in India. The expansion plan will encompass a mix of brownfield and greenfield projects, contributing to the company’s growth strategy. The company has planned an outlay of Rs8.5-9 billion, which will ensure robust financial support for driving the expansion. This expansion will encompass the upcoming Aster Capital in Trivandrum, featuring 350-plus beds in the first phase by FY26, and Aster MIMS Kasargod with 200-plus beds. Then the company will be looking at adding bed capacity to the existing hospitals in Medcity, MIMS Kannur by about 100 beds each and Aster Whitefield with 159 beds.

In the GCC, the company has plans to expand its Aster Pharmacy business in Saudi Arabia with 180 retail stores set to open within the next three to five years. This would be alongside the expansion of Aster Sanad Hospital in Riyadh with added bed-capacity to serve a larger population segment. In UAE, the company is all set to launch Medcare Royal Hospital, a 126-bed super specialty hospital in Al Qusais, positioned to emerge as the destination for tertiary and quaternary care in a luxury setting, for local and international patients.