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Dubai-based Aster DM Healthcare’s decision to segregate its businesses in the GCC (Gulf Co-Operation Council) region and India, will facilitate a clear capital allocation strategy for the India business, Aster management told investors.
The group runs a chain of hospitals, clinics and pharmacies, and the news of its restructuring exercise sent stock prices soaring on the stock exchange, with Aster DM Healthcare closing up 19 per cent at ₹396.15 on Wednesday.
Late on Tuesday, Aster DM had announced the transaction that valued the GCC business at $1 billion. Under the separation plan, a consortium led by Fajr Capital had entered into a definitive agreement to acquire a 65 per cent stake in the ownership of the GCC business, Aster DM Healthcare FZC. The promoter Moopen family was to continue to manage and operate the GCC business retaining a 35 per cent stake.
Pure play entities
Azad Moopen, Founder and Chairman of Aster DM Healthcare, said the segregation was to derive the fair value of both entities, “creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets.” On reports that the India business was also looking to sell stake, he told businessline that the promoters were committed to the business. Promoters had increased stake in the company to 42 per cent earlier this year, 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,” he added, suggesting expansion especially in Saudi Arabia.
The transaction was executed through Aster DM’s overseas subsidiary, Affinity, that 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 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, a note on the transaction said.
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