Aster DM Healthcare to split India, GCC biz for $1.01 bn

Dr Azad Moopen-led Aster DM Healthcare (Aster) has decided to separate its India and Gulf business. The leading hospital chain will sell its GCC (Gulf Co-Operation Council) businesses to Alpha GCC Holdings Ltd for around $1.01 billion. Aster DM Healthcare has received board approvals from its subsidiary Affinity Holdings Private Ltd and approval from its board to separate the India and GCC businesses into two distinct and standalone entities.

Under the separation plan, Affinity has entered into a definitive agreement with a consortium of investors led by Fajr Capital, a sovereign-owned private equity firm headquartered in the UAE, to invest in Aster’s GCC business. The current m-cap of the combined India and GCC business of Aster DM stands at $2 billion. The transaction values the GCC business at an enterprise value of $1.7 billion and an equity value of $1 billion.

The Fajr Capital-led consortium also includes Emirates Investment Authority, Al Dhow Holding Company (the investment arm of AlSayer Group), Hana Investment Company (a subsidiary of Olayan Financing Company) and Wafra International Investment Company.  

Aster DM Healthcare was established by Dr Azad Moopen in 1987 as a single clinic in Dubai, UAE. The company has since grown to become a leading integrated private healthcare provider, offering a full spectrum of primary, secondary, tertiary and quaternary healthcare services that cater to the diverse needs of its patients. In India, Aster has a substantial and growing network in 5 South Indian states through its 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres. 

In the Gulf, Aster has developed a strong reputation and presence, with 15 hospitals, 118 clinics and 276 pharmacies across the UAE, Saudi Arabia, Qatar, Oman, Bahrain and Jordan. 

Upon completion, the separation of the India and GCC businesses will establish two distinct regional healthcare companeis that will benefit from the strategic and financial flexibility to focus on growing market demand and the priorities of patients. 

Explaining rationale behind the deal, Aster DM says GCC and India healthcare markets are distinct and have different growth dynamics, warranting different business strategies. 

“Both the India and GCC entities will be operated by separate dedicated management teams and will also benefit from a dedicated investor base that will aid future growth in the Indian and GCC markets respectively, both of which hold significant growth potential.”  

Considering the market size, India will remain a priority market, says Aster DM, adding that it plans to ramp up bed capacity in India by almost one-thirds, by adding more than 1,500 beds by FY27. 

In the GCC, Aster DM Healthcare FZC will bolster its expansion plans in key markets, such as the UAE and Saudi Arabia, while enabling greater access to quality and comprehensive healthcare across physical and digital channels.

Azad Moopen, founder and chairman of Aster DM Healthcare said: “The strategic decision to segregate the India and GCC operations was based on the rationale to establish fair value for both entities, creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets. In India, we as promoters, remain committed to our growth plans and hence had increased our stake to 42% earlier this year. Major institutional shareholders continue to remain invested, reflecting overall confidence in the company’s India business model and go-to-market strategy spanning all segments of the healthcare space.”

He added: “For the GCC, Fajr Capital has been selected by the board of Affinity as our trusted private equity partner to lead a consortium of investors to invest in the GCC business. We are confident given their demonstrated expertise and are excited by their commitment to empowering our expansion plans within the GCC’s dynamic healthcare landscape, especially in Saudi Arabia. The Moopen family will retain 35% stake in the GCC Business.” 

Post completion, Dr Azad Moopen will continue as the Founder & Chairman of Aster overseeing both India and GCC entities. Alisha Moopen will be promoted to Managing Director and Group CEO of the GCC business. The Indian entity will continue to be led by Dr. Nitish Shetty as Chief Executive Officer, who will focus on the growth of the India business, aimed at creating value for its shareholders.