Aster DM Healthcare shares fall 7% amid block deal

Shares of Aster DM Healthcare fell over 7% in opening trade on Wednesday, extending losses for the second consecutive session, driven by strong volume amid a report that Singapore-based private equity firm Olympus Capital Asia Investments mulls selling a part of its stake in the private healthcare services provider through a block deal.

As per report, Olympus Capital Asia Investments looks to offload a 9.8% stake in Aster DM Healthcare for up to ₹1,953 crore (nearly $235 million) at the floor price of ₹400 per share, a discount of 8.4% to Tuesday's closing price. As of December 2023, Olympus Capital Asia Investments held 18.96% shares in Aster DM.

Driven by strong volume, Aster DM Healthcare shares declined as much as 7.2% to ₹405 on the BSE. The stock opened lower at ₹412.90 against the previous closing price of ₹436.65.

The counter witnessed a spurt in volume trade with more than 5 crore shares changing hands in the early deal as compared to the two-week average of 0.29 lakh stocks. The market capitalisation slipped to ₹20,407 crore at the time of reporting.

Aster DM Healthcare shares have seen a strong rally in the calendar year 2024, with the share price more than doubling from its 52-week low of ₹232 touched on March 28, 2023, to a record high of ₹495.15 on February 28, 2024. In the last one year, the healthcare stock has risen 74%, while it gained 26% in six months. The stock has witnessed some correction in the last month, falling over 13% as investors resorted to profit booking at record high levels.

Last week, Aster DM Healthcare informed exchanges that the separation of its India and GCC (Gulf Cooperation Council) businesses and the proposed investment in the GCC business by a consortium of investors led by Fajr Capital, a sovereign-owned private equity firm headquartered in the UAE, is nearing completion.

In November 2023, the hospital and pharmacy chain operator received corporate approvals to split its India and GCC businesses into two distinct and standalone entities to unlock value for the shareholders of the company. Under the separation plan, a Fajr Capital-led consortium has proposed to acquire a 65% stake in the company’s GCC business, which 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 the Kingdom of Saudi Arabia’s General Authority for Competition (GAC). All conditions precedent outlined in the SPA are now complete,” it said in an exchange filing on March 20.

As part of the separation plan, Dr. Azad Moopen's family will continue to lead and operate the GCC business retaining a 35% stake in the buyer entity, while existing shareholders will continue to remain with the listed Indian entity, Aster DM Healthcare. “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,” the release noted.

In India, the promoters plan to continue to hold their existing stake in the company and the separation would provide it an opportunity to expand its institutional investor base. The company plans to add 1,500 beds by FY27 and aims to be among the top 3 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 ₹850-900 crore which will ensure robust financial support for driving the expansion,” the release highlighted.

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. Besides, the company looks to add bed capacity to the existing hospitals in Medcity, MIMS Kannur by about 100 beds each and Aster Whitefield with 159 beds.

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