Apollo Hospitals Arm To Raise $297 Mln From Advent International

Apollo HealthCo Ltd., a subsidiary of Apollo Hospitals Enterprise Ltd., will fully integrate Keimed Private Ltd. into the company and raise 2,475 crore rupees ($297 million) from Advent International against a 12.1% stake in the merged entity.

Global private equity firm Advent will invest in compulsory convertible instruments over two tranches to secure a 12.1% stake in Apollo HealthCo, which would be the surviving entity, valuing the merged entity at an enterprise value of 22,481 crore rupees, Apollo Hospitals said in a stock exchange announcement.

The Indian healthcare company said Apollo HealthCo has entered into a framework agreement to integrate 100% of Keimed, India's leading wholesale pharma distributor, in a phased manner over the next 24 to 30 months.

Pursuant to merger, Keimed shareholders will hold a maximum of 25.7% stake in the combined entity, while Apollo Hospitals would continue to remain the largest controlling shareholder with at least 59.2% stake.

Apollo Hospitals Group Chairman Prathap Reddy said with Advent's investment and the merger of Keimed, the combined entity will be one of the country's leading retail health companies.

The merged entity will have an industry defining business model with pan-India presence and potential to unlock significant business synergies, according to the statement. The merger with Keimed is estimated to be EPS accretive from the first year, it said.

“The merger of Keimed is a significant step in the integration of the comprehensive supply chain. The combined entity will deliver 25,000 crore rupees of revenue in three years with 7%-8% EBITDA,” Apollo Hospitals Managing Director Suneeta Reddy said.

Veda Corporate Advisors acted as the exclusive financial advisor for the transactions.

Shardul Amarchand Mangaldas & Co was the legal advisor to Apollo HealthCo, while AZB & Partners acted as legal advisor to Apollo Hospitals. Cyril Amarchand Mangaldas was the legal advisor to Advent for the transactions.

The deals are subject to necessary customary approvals.

Note: $1 = 83.3632 Indian rupees

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