The Hindu Business Line : Promoters to increase holding in Apollo Hospitals Enterprise

PRIOR to a proposed overseas listing, the promoters, Dr Pratap C Reddy family, are strengthening their grip on Apollo Hospitals Enterprise Ltd by increasing their holding by almost two percentage points through a preferential allotment of equity warrants.

The promoters, who also wish to have greater participation by overseas investors in the company, have, apart from the proposed ADR/GDR issue, consented to a possible hike in FII holding in it from 49 per cent to 74 per cent.

The promoters, in order to increase their stake, are bringing in a fresh investment of around Rs 34.75 crore by purchasing 10.39 lakh equity warrants. The nominal value of these warrants, which would be later converted into equity, is Rs 10 and the premium is Rs 324.15. While PCR Investments Ltd would be purchasing 10.09 lakh warrants, the remaining 30,000 warrants would be purchased individually by six members of the Pratap Reddy family. They include patriarch Dr Prathap C Reddy, who would subscribe to 5,000 warrants. The others too would be purchasing 5,000 warrants each. In a proposal forwarded to the shareholders, the company has stated that the object of the issue is to meet the "fund requirements for the expansion of its activities, finance additional working capital requirements and general corporate purpose".

The promoters would first make a 10 per cent payment of the total amount on the date of allotment of the warrants and the rest 90 per cent would be paid on the date of the conversion of the warrants into equity. As on April 18, the promoters' stake in Apollo Hospitals stood at 33.82 per cent. Post issue, this is scheduled to increase to 35.44 per cent.

Regarding the proposed ADR/GDR issue, the company stated that it would bring about several advantages including broadening of investor exposure (that is, courtesy investors with greater financial power). The move is supposed to help in stabilising the share prices. Depository Receipts, the company has observed, presented "a popular mechanism for certain categories of international investors who are looking for diversification without any of the obstacles that mutual funds, pension funds and other institutions may have in purchasing and holding securities outside their local market".

The promoters, it may be mentioned, wish to increase FII holding. As on April 18, this stood at 27.07 per cent. For the record, FEMA allows FIIs to invest up to 100 per cent of the paid-up equity capital, provided the company gets the shareholders' approval.

"In view of the active interest evinced by FIIs in our stock, their shareholding may exceed the existing investment limit of 49 per cent. Therefore, it is proposed to increase the said limit to 74 per cent from 49 per cent," the company has stated.

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